We Ran A Stock Scan For Earnings Growth And Hume Cement Industries Berhad (KLSE:HUMEIND) Passed With Ease
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. 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 Hume Cement Industries Berhad (KLSE:HUMEIND). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Hume Cement Industries Berhad with the means to add long-term value to shareholders.
See our latest analysis for Hume Cement Industries Berhad
Over the last three years, Hume Cement Industries Berhad 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. It’s good to see that Hume Cement Industries Berhad’s EPS has grown from RM0.24 to RM0.29 over twelve months. That’s a 22% gain; respectable growth in the broader scheme of things.
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. Hume Cement Industries Berhad shareholders can take confidence from the fact that EBIT margins are up from 16% to 25%, and revenue is growing. Both of which are great metrics to check off for potential growth.
You can take a look at the company’s revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
While profitability drives the upside, prudent investors always check the balance sheet, too.
It’s a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Hume Cement Industries 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. As a matter of fact, their holding is valued at RM111m. That shows significant buy-in, and may indicate conviction in the business strategy. While their ownership only accounts for 4.8%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.
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