It is common for many investors, especially those who are inexperienced, to buy shares in companies that have a good history, even if those companies are loss-making. But the reality is that when a company loses money every year, for long enough, its investors will usually take their share of those losses. A loss-making company has not yet proven itself with profits, and eventually the inflow of external capital may dry up.
Contrary to all this, many investors prefer to focus on companies like TSH Berhad Resources (KLSE:TSH), which not only generates revenue, but also profits. While profit isn’t the only metric to consider when investing, it’s worth recognizing companies that can consistently produce it.
See our latest analysis for TSH Resources Berhad
TSH Resources Berhad improves profits
Over the past three years, TSH Resources Berhad’s earnings per share have taken off; so much so that it’s a bit dishonest to use these numbers to try to derive long-term estimates. It would therefore be better to isolate the growth rate over the last year for our analysis. Impressively, TSH Resources Berhad’s EPS has risen from RM0.071 to RM0.18 over the past year. It’s not often that a business can achieve 150% annual growth. This could be a sign that the company has reached a real inflection point.
One way to check a company’s growth is to look at the evolution of its revenues and its earnings before interest and taxes (EBIT) margins. The good news is that TSH Resources Berhad is increasing revenue and EBIT margins have improved by 5.6 percentage points to 17% compared to last year. It’s great to see, on both counts.
You can check the company’s revenue and profit growth trend in the table below. For more details, click on the image.
Of course, the trick is to find stocks that have their best days in the future, not in the past. You can of course base your opinion on past performance, but you can also check out this interactive chart of professional analyst EPS forecasts for TSH Resources Berhad.
Are TSH Resources Berhad insiders aligned with all shareholders?
The theory would suggest that it is an encouraging sign to see strong insider ownership of a company, as it directly links the company’s performance to the financial success of its management. So, those interested in TSH Resources Berhad will be pleased to know that insiders have shown their belief, owning a large portion of the company’s shares. In fact, they own 45% of the shares, making insiders a very influential group of shareholders. Shareholders and speculators should be reassured by this type of alignment, as it suggests that the company will be run for the benefit of shareholders. In terms of absolute value, insiders have invested RM690 million in the company, at the current share price. So there is something to keep them focused!
Should you add TSH Resources Berhad to your watchlist?
Earnings per share at TSH Resources Berhad soared, with dizzying growth rates. This level of EPS growth does wonders for attracting investment, and the big insider investment in the business is just the icing on the cake. The hope is, of course, that the strong growth marks a fundamental improvement in the business economy. So based on this quick scan, we think it’s worth considering TSH Resources Berhad for a spot on your watchlist. It must be said that we discovered 4 warning signs for TSH Resources Berhad (1 makes us a little uneasy!) that you should be aware of before investing here.
The beauty of investing is that you can invest in almost any business you want. But if you’d rather focus on stocks that have been insider buying, here’s a list of companies that have been insider buying over the past three months.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.