Do Korea Fuel-Tech's (KOSDAQ:123410) Earnings Warrant Your Attention?

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

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Korea Fuel-Tech (KOSDAQ:123410). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Korea Fuel-Tech with the means to add long-term value to shareholders.

Check out our latest analysis for Korea Fuel-Tech

How Fast Is Korea Fuel-Tech Growing Its Earnings Per Share?

In business, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS) performance. Which is why EPS growth is looked upon so favourably. It's an outstanding feat for Korea Fuel-Tech to have grown EPS from ₩336 to ₩1,097 in just one year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future. This could point to the business hitting a point of inflection.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Korea Fuel-Tech remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 21% to ₩680b. That's a real positive.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Korea Fuel-Tech's forecast profits?

Are Korea Fuel-Tech Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Korea Fuel-Tech insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at ₩17b. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 9.4% of the shares on issue for the business, an appreciable amount considering the market cap.

Is Korea Fuel-Tech Worth Keeping An Eye On?

Korea Fuel-Tech's earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Korea Fuel-Tech for a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 2 warning signs for Korea Fuel-Tech that you need to be mindful of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in KR with promising growth potential and insider confidence.

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.