If EPS Growth Is Important To You, Soilbuild Construction Group (SGX:V5Q) Presents An Opportunity
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Soilbuild Construction Group (SGX:V5Q). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
Soilbuild Construction Group's Improving Profits
Over the last three years, Soilbuild Construction Group 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. As a result, we'll zoom in on growth over the last year, instead. In impressive fashion, Soilbuild Construction Group's EPS grew from S$0.055 to S$0.16, over the previous 12 months. It's not often a company can achieve year-on-year growth of 191%. The best case scenario? That the business has hit a true inflection point.
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. Soilbuild Construction Group shareholders can take confidence from the fact that EBIT margins are up from 2.2% to 6.2%, and revenue is growing. That's great to see, on both counts.
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.
View our latest analysis for Soilbuild Construction Group
Since Soilbuild Construction Group is no giant, with a market capitalisation of S$253m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Soilbuild Construction Group Insiders Aligned With All Shareholders?
Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So we're pleased to report that Soilbuild Construction Group insiders own a meaningful share of the business. To be exact, company insiders hold 88% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. In terms of absolute value, insiders have S$224m invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!
Does Soilbuild Construction Group Deserve A Spot On Your Watchlist?
Soilbuild Construction Group's earnings per share have been soaring, with growth rates sky high. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, Soilbuild Construction Group is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Before you take the next step you should know about the 1 warning sign for Soilbuild Construction Group that we have uncovered.
Although Soilbuild Construction Group certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Singaporean companies that not only boast of strong growth but have strong insider backing.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.
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