Here's Why We Think Jardine Cycle & Carriage (SGX:C07) Might Deserve Your Attention 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. 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.
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 Jardine Cycle & Carriage (SGX:C07). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jardine Cycle & Carriage with the means to add long-term value to shareholders.
Check out our latest analysis for Jardine Cycle & Carriage
How Fast Is Jardine Cycle & Carriage Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Shareholders will be happy to know that Jardine Cycle & Carriage's EPS has grown 31% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. Not all of Jardine Cycle & Carriage's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for Jardine Cycle & Carriage remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 2.0% to US$22b. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Jardine Cycle & Carriage's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Jardine Cycle & Carriage 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The first bit of good news is that no Jardine Cycle & Carriage insiders reported share sales in the last twelve months. Even better, though, is that the Group MD & Director, Benjamin Birks, bought a whopping US$644k worth of shares, paying about US$33.90 per share, on average. Purchases like this can offer an insight into the faith of the company's management - and it seems to be all positive.
The good news, alongside the insider buying, for Jardine Cycle & Carriage bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold US$48m worth of its stock. That's a lot of money, and no small incentive to work hard. While their ownership only accounts for 0.5%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Benjamin Birks is paid comparatively modestly to CEOs at similar sized companies. The median total compensation for CEOs of companies similar in size to Jardine Cycle & Carriage, with market caps between US$4.0b and US$12b, is around US$4.0m.
The Jardine Cycle & Carriage CEO received US$3.2m in compensation for the year ending December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.
Should You Add Jardine Cycle & Carriage To Your Watchlist?
You can't deny that Jardine Cycle & Carriage has grown its earnings per share at a very impressive rate. That's attractive. Moreover, the management and board of the company hold a significant stake in the company, with one party adding to this total. So it's fair to say that this stock may well deserve a spot on your watchlist. We should say that we've discovered 2 warning signs for Jardine Cycle & Carriage (1 is potentially serious!) that you should be aware of before investing here.
Keen growth investors love to see insider buying. Thankfully, Jardine Cycle & Carriage isn't the only one. You can see a a curated list of Singaporean companies which have exhibited consistent growth accompanied by recent insider buying.
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.
