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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Aeon (M) Bhd (KLSE:AEON). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Aeon (M) Bhd with the means to add long-term value to shareholders.
View our latest analysis for Aeon (M) Bhd
How Fast Is Aeon (M) Bhd Growing Its Earnings Per Share?
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's easy to see why many investors focus in on EPS growth. Aeon (M) Bhd's EPS skyrocketed from RM0.061 to RM0.079, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 30%.
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. Aeon (M) Bhd maintained stable EBIT margins over the last year, all while growing revenue 14% to RM4.1b. That's a real positive.
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.
Fortunately, we've got access to analyst forecasts of Aeon (M) Bhd's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Aeon (M) Bhd Insiders Aligned With All Shareholders?
Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. The median total compensation for CEOs of companies similar in size to Aeon (M) Bhd, with market caps between RM905m and RM3.6b, is around RM1.1m.
The Aeon (M) Bhd CEO received RM753k in compensation for the year ending December 2022. That is actually below the median for CEO's of similarly sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.