For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Kotra Industries Berhad (KLSE:KOTRA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kotra Industries Berhad with the means to add long-term value to shareholders.
View our latest analysis for Kotra Industries Berhad
How Fast Is Kotra Industries Berhad Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Kotra Industries Berhad's EPS has grown 29% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. While we note Kotra Industries Berhad achieved similar EBIT margins to last year, revenue grew by a solid 16% to RM242m. That's encouraging news for the company!
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
Fortunately, we've got access to analyst forecasts of Kotra Industries 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 Kotra Industries Berhad 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 Kotra Industries Berhad insiders own a significant number of shares certainly is appealing. Owning 35% of the company, insiders have plenty riding on the performance of the the share price. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. To give you an idea, the value of insiders' holdings in the business are valued at RM268m at the current share price. That should be more than enough to keep them focussed on creating shareholder value!