If EPS Growth Is Important To You, Jardine Cycle & Carriage (SGX:C07) Presents An Opportunity

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editorial-team@simplywallst.com (Simply Wall St)

Thu, Jan 23, 2025, 6:56 PM 4 min read

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 Jardine Cycle & Carriage (SGX:C07). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jardine Cycle & Carriage with the means to add long-term value to shareholders.

Check out our latest analysis for Jardine Cycle & Carriage

How Fast Is Jardine Cycle & Carriage Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Jardine Cycle & Carriage's EPS has grown 31% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of Jardine Cycle & Carriage's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. Jardine Cycle & Carriage's EBIT margins are flat but, worryingly, its revenue is actually down. While this may raise concerns, investors should investigate the reasoning behind this.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

earnings-and-revenue-history — SGX:C07 Earnings and Revenue History January 24th 2025

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Jardine Cycle & Carriage's future profits.

Are Jardine Cycle & Carriage Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Any way you look at it Jardine Cycle & Carriage shareholders can gain quiet confidence from the fact that insiders shelled out US$542k to buy stock, over the last year. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. Zooming in, we can see that the biggest insider purchase was by Executive Director & Group Finance Director Hai Yeh Hsu for S$274k worth of shares, at about S$27.49 per share.

Along with the insider buying, another encouraging sign for Jardine Cycle & Carriage is that insiders, as a group, have a considerable shareholding. To be specific, they have US$36m worth of shares. This considerable investment should help drive long-term value in the business. While their ownership only accounts for 0.3%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Should You Add Jardine Cycle & Carriage To Your Watchlist?

For growth investors, Jardine Cycle & Carriage's raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. We should say that we've discovered 1 warning sign for Jardine Cycle & Carriage that you should be aware of before investing here.

The good news is that Jardine Cycle & Carriage is not the only stock with insider buying. Here's a list of small cap, undervalued companies in SG with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.