Here's Why We Think Holders Technology (LON:HDT) Is Well Worth Watching

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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Holders Technology (LON:HDT). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

Check out our latest analysis for Holders Technology

How Fast Is Holders Technology Growing Its Earnings Per Share?

In the last three years Holders Technology's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Holders Technology has grown its trailing twelve month EPS from UK£0.041 to UK£0.043, in the last year. That amounts to a small improvement of 6.1%.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Holders Technology's EBIT margins are flat but, of some concern, its revenue is actually down. Suffice it to say that is not a great sign of growth.

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.

earnings-and-revenue-history
AIM:HDT Earnings and Revenue History July 18th 2020

Since Holders Technology is no giant, with a market capitalization of UK£1.6m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Holders Technology Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that Holders Technology insiders own a significant number of shares certainly appeals to me. In fact, they own 62% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes me think they will be incentivised to plan for the long term - something I like to see. Of course, Holders Technology is a very small company, with a market cap of only UK£1.6m. So despite a large proportional holding, insiders only have UK£988k worth of stock. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.