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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 GHL Systems Berhad (KLSE:GHLSYS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide GHL Systems Berhad with the means to add long-term value to shareholders.
View our latest analysis for GHL Systems Berhad
How Fast Is GHL Systems Berhad Growing?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. It certainly is nice to see that GHL Systems Berhad has managed to grow EPS by 27% per year over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. GHL Systems Berhad maintained stable EBIT margins over the last year, all while growing revenue 15% to RM431m. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of GHL Systems Berhad's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are GHL Systems Berhad Insiders Aligned With All Shareholders?
It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. GHL Systems Berhad followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. To be specific, they have RM141m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 15% of the company; visible skin in the game.