Is Now The Time To Put TENPOS HOLDINGSLtd (TSE:2751) On Your Watchlist?

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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like TENPOS HOLDINGSLtd (TSE:2751), which has not only revenues, but also profits. 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 TENPOS HOLDINGSLtd

TENPOS HOLDINGSLtd's Improving Profits

TENPOS HOLDINGSLtd has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. TENPOS HOLDINGSLtd's EPS shot up from JP¥107 to JP¥145; a result that's bound to keep shareholders happy. That's a commendable gain of 36%.

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. TENPOS HOLDINGSLtd maintained stable EBIT margins over the last year, all while growing revenue 19% to JP¥36b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

TENPOS HOLDINGSLtd isn't a huge company, given its market capitalisation of JP¥41b. That makes it extra important to check on its balance sheet strength.

Are TENPOS HOLDINGSLtd 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. So it is good to see that TENPOS HOLDINGSLtd insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at JP¥14b, they have plenty of motivation to push the business to succeed. At 33% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Does TENPOS HOLDINGSLtd Deserve A Spot On Your Watchlist?

For growth investors, TENPOS HOLDINGSLtd's raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. 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. Of course, identifying quality businesses is only half the battle; investors need to know whether the stock is undervalued. So you might want to consider this free discounted cashflow valuation of TENPOS HOLDINGSLtd.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Japanese companies which have demonstrated growth backed by recent insider purchases.

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.