Is Now The Time To Put Sebo Manufacturing Engineering & Construction (KOSDAQ:011560) 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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Sebo Manufacturing Engineering & Construction (KOSDAQ:011560). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Sebo Manufacturing Engineering & Construction with the means to add long-term value to shareholders.

View our latest analysis for Sebo Manufacturing Engineering & Construction

How Fast Is Sebo Manufacturing Engineering & Construction Growing Its Earnings Per Share?

Over the last three years, Sebo Manufacturing Engineering & Construction has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Sebo Manufacturing Engineering & Construction's EPS skyrocketed from ₩2,699 to ₩3,641, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 35%.

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. While Sebo Manufacturing Engineering & Construction may have maintained EBIT margins over the last year, revenue has fallen. This does not bode too well for short term growth prospects and so understanding the reasons for these results is of great importance.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Since Sebo Manufacturing Engineering & Construction is no giant, with a market capitalisation of ₩120b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Sebo Manufacturing Engineering & Construction Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So we're pleased to report that Sebo Manufacturing Engineering & Construction insiders own a meaningful share of the business. Actually, with 50% of the company to their names, insiders are profoundly invested in the business. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. With that sort of holding, insiders have about ₩60b riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Should You Add Sebo Manufacturing Engineering & Construction To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Sebo Manufacturing Engineering & Construction's strong EPS growth. 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. Still, you should learn about the 2 warning signs we've spotted with Sebo Manufacturing Engineering & Construction.

Although Sebo Manufacturing Engineering & Construction certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of South Korean companies that not only boast of strong growth but have strong insider backing.

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.