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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 Hextar Industries Berhad (KLSE:HEXIND). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Hextar Industries Berhad with the means to add long-term value to shareholders.
See our latest analysis for Hextar Industries Berhad
How Fast Is Hextar Industries Berhad Growing Its Earnings Per Share?
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Impressively, Hextar Industries Berhad's EPS catapulted from RM0.0092 to RM0.027, over the last year. It's a rarity to see 192% year-on-year growth like that. The best case scenario? That the business has hit a true inflection point.
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. Hextar Industries Berhad shareholders can take confidence from the fact that EBIT margins are up from 3.0% to 11%, and revenue is growing. That's great to see, on both counts.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
While profitability drives the upside, prudent investors always check the balance sheet, too.
Are Hextar Industries Berhad Insiders Aligned With All Shareholders?
It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Hextar Industries Berhad insiders have a significant amount of capital invested in the stock. To be specific, they have RM123m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 8.6% of the company; visible skin in the game.