The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like IRIS Corporation Berhad (KLSE:IRIS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide IRIS Corporation Berhad with the means to add long-term value to shareholders.
View our latest analysis for IRIS Corporation Berhad
IRIS Corporation Berhad's Improving Profits
Over the last three years, IRIS Corporation Berhad has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. IRIS Corporation Berhad boosted its trailing twelve month EPS from RM0.036 to RM0.043, in the last year. This amounts to a 20% gain; a figure that shareholders will be pleased to see.
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. IRIS Corporation Berhad's EBIT margins are flat but, worryingly, its revenue is actually down. Suffice it to say that is not a great sign of growth.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
IRIS Corporation Berhad isn't a huge company, given its market capitalisation of RM265m. That makes it extra important to check on its balance sheet strength.
Are IRIS Corporation Berhad Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that IRIS Corporation Berhad insiders have a significant amount of capital invested in the stock. To be specific, they have RM65m worth of shares. This considerable investment should help drive long-term value in the business. That amounts to 24% of the company, demonstrating a degree of high-level alignment with shareholders.