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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like ISEC Healthcare (Catalist:40T). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ISEC Healthcare with the means to add long-term value to shareholders.
See our latest analysis for ISEC Healthcare
ISEC Healthcare's Earnings Per Share Are Growing
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years ISEC Healthcare grew its EPS by 12% per year. That's a good rate of growth, if it can be sustained.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The music to the ears of ISEC Healthcare shareholders is that EBIT margins have grown from 23% to 27% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Since ISEC Healthcare is no giant, with a market capitalisation of S$180m, you should definitely check its cash and debt before getting too excited about its prospects.
Are ISEC Healthcare 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
It's nice to see that there have been no reports of any insiders selling shares in ISEC Healthcare in the previous 12 months. With that in mind, it's heartening that Jun Shyan Wong, the Chief Executive Officer of the company, paid S$28k for shares at around S$0.32 each. It seems that at least one insider is prepared to show the market there is potential within ISEC Healthcare.