Is Now The Time To Put A-Tech Solution (KOSDAQ:071670) On Your Watchlist?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like A-Tech Solution (KOSDAQ:071670). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for A-Tech Solution

How Fast Is A-Tech Solution Growing Its Earnings Per Share?

Over the last three years, A-Tech Solution has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, A-Tech Solution's EPS shot from ₩145 to ₩285, over the last year. You don't see 96% year-on-year growth like that, very often.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). A-Tech Solution maintained stable EBIT margins over the last year, all while growing revenue 5.1% to ₩240b. That's progress.

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.

Since A-Tech Solution is no giant, with a market capitalization of ₩169b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are A-Tech Solution Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that A-Tech Solution insiders have a significant amount of capital invested in the stock. With a whopping ₩57b worth of shares as a group, insiders have plenty riding on the company's success. At 34% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Should You Add A-Tech Solution To Your Watchlist?

A-Tech Solution's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it's worth considering A-Tech Solution for a spot on your watchlist. Even so, be aware that A-Tech Solution is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

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. 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.
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