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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in XL Holdings Berhad (KLSE:XL). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out our latest analysis for XL Holdings Berhad
How Fast Is XL Holdings Berhad Growing Its Earnings Per Share?
In the last three years XL Holdings Berhad's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. XL Holdings Berhad's EPS has risen over the last 12 months, growing from RM0.019 to RM0.021. This amounts to a 10% 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. We note that while EBIT margins have improved from 7.4% to 11%, the company has actually reported a fall in revenue by 21%. While not disastrous, these figures could be better.
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.
XL Holdings Berhad isn't a huge company, given its market capitalisation of RM222m. That makes it extra important to check on its balance sheet strength.
Are XL Holdings Berhad Insiders Aligned With All Shareholders?
Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So we're pleased to report that XL Holdings Berhad insiders own a meaningful share of the business. Indeed, with a collective holding of 52%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. To give you an idea, the value of insiders' holdings in the business are valued at RM115m at the current share price. That's nothing to sneeze at!