With EPS Growth And More, Jp-HoldingsInc (TSE:2749) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Jp-HoldingsInc (TSE:2749). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jp-HoldingsInc with the means to add long-term value to shareholders.

Check out our latest analysis for Jp-HoldingsInc

Jp-HoldingsInc's Improving Profits

Jp-HoldingsInc 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. Jp-HoldingsInc boosted its trailing twelve month EPS from JP¥31.18 to JP¥34.31, in the last year. This amounts to a 10% gain; a figure that shareholders will be pleased to see.

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. EBIT margins for Jp-HoldingsInc remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 6.6% to JP¥38b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Jp-HoldingsInc's balance sheet strength, before getting too excited.

Are Jp-HoldingsInc 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 Jp-HoldingsInc insiders have a significant amount of capital invested in the stock. To be specific, they have JP¥2.5b worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 5.7% of the company, demonstrating a degree of high-level alignment with shareholders.

Is Jp-HoldingsInc Worth Keeping An Eye On?

As previously touched on, Jp-HoldingsInc is a growing business, which is encouraging. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. Even so, be aware that Jp-HoldingsInc is showing 1 warning sign in our investment analysis , you should know about...

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 significant insider holdings.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com