If EPS Growth Is Important To You, Dongsin Engineering & Construction (KOSDAQ:025950) Presents An Opportunity

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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Dongsin Engineering & Construction (KOSDAQ:025950). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Dongsin Engineering & Construction with the means to add long-term value to shareholders.

View our latest analysis for Dongsin Engineering & Construction

Dongsin Engineering & Construction's Improving Profits

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So a growing EPS generally brings attention to a company in the eyes of prospective investors. Commendations have to be given in seeing that Dongsin Engineering & Construction grew its EPS from ₩135 to ₩1,061, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.

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 Dongsin Engineering & Construction remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 47% to ₩76b. That's encouraging news for the company!

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 Dongsin Engineering & Construction is no giant, with a market capitalisation of ₩188b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Dongsin Engineering & Construction Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So we're pleased to report that Dongsin Engineering & Construction insiders own a meaningful share of the business. In fact, they own 69% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. To give you an idea, the value of insiders' holdings in the business are valued at ₩130b at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Is Dongsin Engineering & Construction Worth Keeping An Eye On?

Dongsin Engineering & Construction's earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Dongsin Engineering & Construction very closely. You should always think about risks though. Case in point, we've spotted 2 warning signs for Dongsin Engineering & Construction you should be aware of, and 1 of them is a bit concerning.

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.