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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Southern Score Builders Berhad (KLSE:SSB8). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Southern Score Builders Berhad with the means to add long-term value to shareholders.
See our latest analysis for Southern Score Builders Berhad
How Fast Is Southern Score Builders Berhad Growing Its Earnings Per Share?
Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's easy to see why many investors focus in on EPS growth. Southern Score Builders Berhad's EPS skyrocketed from RM0.011 to RM0.014, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 28%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Despite consistency in EBIT margins year on year, Southern Score Builders Berhad has actually recorded a dip in revenue. Suffice it to say that is not a great sign of growth.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
Southern Score Builders Berhad isn't a huge company, given its market capitalisation of RM1.3b. That makes it extra important to check on its balance sheet strength.
Are Southern Score Builders Berhad Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Southern Score Builders 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. Holding RM323m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. Amounting to 25% of the outstanding shares, indicating that insiders are also significantly impacted by the decisions they make on the behalf of the business.