Some have more money than sense, they say, so even companies with no revenue, no profit and a history of failures can easily find investors. But as Peter Lynch said in One Up on Wall Street“Long shots almost never pay off.”
So if you’re like me, you might be more interested in profitable and growing companies, like Thai drink (SGX:Y92). Although profit is not necessarily a social good, it is easy to admire a company that can produce it consistently. While a well-funded business may suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to turn a profit, or else breathe its last breath.
Check out our latest review for Thai Beverage
Thai Beverage’s earnings per share increase.
If you think markets are even remotely efficient, you expect a company’s share price to follow its earnings per share (EPS) over the long term. So it’s no surprise that I like investing in EPS growth companies. We can see that over the past three years, Thai Beverage has grown its EPS by 11% per year. This growth rate is quite good, assuming the company can sustain it.
A careful look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. Thai Beverage’s EBIT margins are stable but, worryingly, its revenue is actually down. Suffice it to say, that’s not a great sign of growth.
The chart below shows how the company’s top and bottom line has grown over time. To see the actual numbers, click on the chart.
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 Thai Beverage.
Are Thai Beverage insiders aligned with all shareholders?
Given that Thai Beverage has a market capitalization of S$17 billion, we wouldn’t expect insiders to hold a high percentage of shares. But we are reassured by the fact that they have invested in the company. Indeed, they have invested a mountain of glittering wealth there, currently valued at ฿929 million. I would find this kind of in-game skin quite encouraging, if I owned stocks, as it would ensure that company executives would also know of my success, or failure, with stocks.
Does the Thai drink deserve a spot on your watch list?
As I mentioned before, Thai Beverage is a growing business, which I like to see. Just as polish makes silverware stand out, the high level of insider ownership enhances my enthusiasm for this growth. The combination sparks joy for me, so I would consider keeping the company on a watch list. Before proceeding to the next step, you must know the 2 warning signs for Thai Beverage (1 doesn’t sit too well with us!) we found out.
You can invest in the company of your choice. 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.