Should You Be Adding New Toyo International Holdings (SGX:N08) To Your Watchlist Today?
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 New Toyo International Holdings (SGX:N08). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide New Toyo International Holdings with the means to add long-term value to shareholders.
See our latest analysis for New Toyo International Holdings
How Fast Is New Toyo International Holdings Growing Its Earnings Per Share?
Over the last three years, New Toyo International Holdings 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. New Toyo International Holdings' EPS has risen over the last 12 months, growing from S$0.018 to S$0.02. This amounts to a 10% gain; a figure that shareholders will be pleased to see.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for New Toyo International Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 8.4% to S$249m. That's progress.
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.
Since New Toyo International Holdings 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 New Toyo International Holdings Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in New Toyo International Holdings will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 50% of the shares, making insiders a very influential shareholder group. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. To give you an idea, the value of insiders' holdings in the business are valued at S$45m at the current share price. That's nothing to sneeze at!
Should You Add New Toyo International Holdings To Your Watchlist?
One important encouraging feature of New Toyo International Holdings is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. However, before you get too excited we've discovered 3 warning signs for New Toyo International Holdings (1 shouldn't be ignored!) that you should be aware of.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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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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