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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Uzma Berhad (KLSE:UZMA), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Uzma Berhad
How Fast Is Uzma Berhad Growing Its Earnings Per Share?
In the last three years Uzma 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. So it would be better to isolate the growth rate over the last year for our analysis. Over the last year, Uzma Berhad increased its EPS from RM0.087 to RM0.091. That's a fair increase of 5.5%.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Uzma Berhad maintained stable EBIT margins over the last year, all while growing revenue 14% to RM522m. That's progress.
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.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Uzma Berhad's future EPS 100% free.
Are Uzma 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. Shareholders will be pleased by the fact that insiders own Uzma Berhad shares worth a considerable sum. To be specific, they have RM142m worth of shares. This considerable investment should help drive long-term value in the business. Those holdings account for over 29% of the company; visible skin in the game.
Is Uzma Berhad Worth Keeping An Eye On?
One important encouraging feature of Uzma Berhad is that it is growing profits. If that's not enough on its own, there is also the rather notable levels of insider ownership. These two factors are a huge highlight for the company which should be a strong contender your watchlists. Even so, be aware that Uzma Berhad is showing 2 warning signs in our investment analysis , you should know about...