With EPS Growth And More, Silk Logistics Holdings (ASX:SLH) Makes An Interesting Case

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

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 Silk Logistics Holdings (ASX:SLH). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Silk Logistics Holdings

Silk Logistics Holdings' 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 easy to see why many investors focus in on EPS growth. To the delight of shareholders, Silk Logistics Holdings' EPS soared from AU$0.16 to AU$0.24, over the last year. That's a fantastic gain of 52%.

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. EBIT margins for Silk Logistics Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 33% to AU$466m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Silk Logistics Holdings.

Are Silk Logistics Holdings Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

With strong conviction, Silk Logistics Holdings insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the AU$114k that Non-Executive Director Louise Thurgood spent buying shares (at an average price of about AU$2.18). It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

Along with the insider buying, another encouraging sign for Silk Logistics Holdings is that insiders, as a group, have a considerable shareholding. As a matter of fact, their holding is valued at AU$49m. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 29% of the company; visible skin in the game.

Does Silk Logistics Holdings Deserve A Spot On Your Watchlist?

For growth investors, Silk Logistics Holdings' raw rate of earnings growth is a beacon in the night. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. These things considered, this is one stock worth watching. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Silk Logistics Holdings that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Silk Logistics Holdings, you'll probably love this free list of growing companies that insiders are 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.