Here's Why Shine Justice (ASX:SHJ) Has Caught The Eye Of Investors
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and 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. 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.
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 Shine Justice (ASX:SHJ). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Shine Justice with the means to add long-term value to shareholders.
Check out our latest analysis for Shine Justice
Shine Justice's Earnings Per Share Are Growing
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Shine Justice managed to grow EPS by 13% per year, over three years. That's a pretty good rate, if the company can sustain it.
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. Shine Justice maintained stable EBIT margins over the last year, all while growing revenue 15% to AU$224m. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Shine Justice isn't a huge company, given its market capitalisation of AU$136m. That makes it extra important to check on its balance sheet strength.
Are Shine Justice Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
In the last twelve months Shine Justice insiders spent AU$46k on stock; good news for shareholders. While this investment may be modest, it is great considering the lack of insider selling. We also note that it was the Independent Chairman of the Board, Graham Bradley, who made the biggest single acquisition, paying AU$22k for shares at about AU$0.74 each.
And the insider buying isn't the only sign of alignment between shareholders and the board, since Shine Justice insiders own more than a third of the company. To be exact, company insiders hold 53% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have AU$72m invested in the business, at the current share price. That's nothing to sneeze at!
Does Shine Justice Deserve A Spot On Your Watchlist?
As previously touched on, Shine Justice is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. We don't want to rain on the parade too much, but we did also find 2 warning signs for Shine Justice that you need to be mindful of.
The good news is that Shine Justice is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!
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) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
