Is Now The Time To Put Southern Score Builders Berhad (KLSE:SSB8) On Your Watchlist?
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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Southern Score Builders Berhad (KLSE:SSB8). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Southern Score Builders Berhad
Southern Score Builders Berhad's Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Southern Score Builders Berhad's EPS skyrocketed from RM0.01 to RM0.014, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 34%.
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. Southern Score Builders Berhad's EBIT margins have actually improved by 15.6 percentage points in the last year, to reach 27%, but, on the flip side, revenue was down 28%. That falls short of ideal.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Since Southern Score Builders Berhad is no giant, with a market capitalisation of RM682m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Southern Score Builders Berhad Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Southern Score Builders Berhad shares worth a considerable sum. As a matter of fact, their holding is valued at RM172m. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 25% of the company; visible skin in the game.
Should You Add Southern Score Builders Berhad To Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Southern Score Builders Berhad's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Southern Score Builders Berhad's continuing strength. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. Before you take the next step you should know about the 3 warning signs for Southern Score Builders Berhad (2 are a bit unpleasant!) that we have uncovered.
Although Southern Score Builders Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Malaysian companies that not only boast of strong growth but have also seen 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.
