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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
In contrast to all that, many investors prefer to focus on companies like Grand Banks Yachts (SGX:G50), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Grand Banks Yachts with the means to add long-term value to shareholders.
See our latest analysis for Grand Banks Yachts
Grand Banks Yachts' Improving Profits
Grand Banks Yachts has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Grand Banks Yachts' EPS shot from S$0.055 to S$0.11, over the last year. Year on year growth of 109% is certainly a sight to behold.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Grand Banks Yachts shareholders can take confidence from the fact that EBIT margins are up from 13% to 22%, and revenue is growing. That's great to see, on both counts.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
Grand Banks Yachts isn't a huge company, given its market capitalisation of S$112m. That makes it extra important to check on its balance sheet strength.
Are Grand Banks Yachts Insiders Aligned With All Shareholders?
Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So those who are interested in Grand Banks Yachts will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 38% of the shares, making insiders a very influential shareholder group. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. With that sort of holding, insiders have about S$43m riding on the stock, at current prices. That's nothing to sneeze at!