The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Union Steel Holdings (SGX:BLA). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Union Steel Holdings

Union Steel Holdings' Improving Profits

Over the last three years, Union Steel Holdings has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Union Steel Holdings' EPS skyrocketed from S$0.18 to S$0.28, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 56%.

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 Union Steel Holdings achieved similar EBIT margins to last year, revenue grew by a solid 34% to S$107m. 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.

Union Steel Holdings isn't a huge company, given its market capitalisation of S$45m. That makes it extra important to check on its balance sheet strength.

Are Union Steel Holdings Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Union Steel Holdings top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the Co-Founder & Executive Director, Yew Ang, paid S$231k to buy shares at an average price of S$0.87. Purchases like this clue us in to the to the faith management has in the business' future.

On top of the insider buying, we can also see that Union Steel Holdings insiders own a large chunk of the company. In fact, they own 76% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. To give you an idea, the value of insiders' holdings in the business are valued at S$34m at the current share price. So there's plenty there to keep them focused!

Does Union Steel Holdings Deserve A Spot On Your Watchlist?

For growth investors, Union Steel Holdings' raw rate of earnings growth is a beacon in the night. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. These things considered, this is one stock worth watching. Still, you should learn about the 2 warning signs we've spotted with Union Steel Holdings.

Keen growth investors love to see insider buying. Thankfully, Union Steel Holdings isn't the only one. You can see a a curated list of Singaporean companies which have exhibited consistent growth accompanied by recent insider buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.