4 days ago
Here's Why We Think Duty Free International (SGX:5SO) Is Well Worth Watching
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.
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 Duty Free International (SGX:5SO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Duty Free International with the means to add long-term value to shareholders.
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How Fast Is Duty Free International Growing Its Earnings Per Share?
Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. Which is why EPS growth is looked upon so favourably. Commendations have to be given in seeing that Duty Free International grew its EPS from RM0.0091 to RM0.045, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. We note that while EBIT margins have improved from 7.5% to 42%, the company has actually reported a fall in revenue by 6.0%. While not disastrous, these figures could be better.
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 Duty Free International
Since Duty Free International is no giant, with a market capitalisation of S$90m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Duty Free International Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
We haven't seen any insiders selling Duty Free International shares, in the last year. So it's definitely nice that Non-Independent Non-Executive Director Soo Lin Chew bought RM22k worth of shares at an average price of around RM0.058. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Duty Free International.
Does Duty Free International Deserve A Spot On Your Watchlist?
Duty Free International's earnings per share growth have been climbing higher at an appreciable rate. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If this these factors intrigue you, then an addition of Duty Free International to your watchlist won't go amiss. We don't want to rain on the parade too much, but we did also find 3 warning signs for Duty Free International (1 shouldn't be ignored!) that you need to be mindful of.
Keen growth investors love to see insider activity. Thankfully, Duty Free International isn't the only one. You can see a a curated list of Singaporean companies which have exhibited consistent growth accompanied by high insider ownership.
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) 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.
