Stock Analysis

Do Lindeman Asia Investment's (KOSDAQ:277070) Earnings Warrant Your Attention?

KOSDAQ:A277070
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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 completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like Lindeman Asia Investment (KOSDAQ:277070). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Lindeman Asia Investment

How Fast Is Lindeman Asia Investment Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Lindeman Asia Investment boosted its trailing twelve month EPS from ₩298 to ₩341, in the last year. I doubt many would complain about that 15% gain.

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. I note that Lindeman Asia Investment's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note Lindeman Asia Investment's EBIT margins were flat over the last year, revenue grew by a solid 6.0% to ₩9.0b. That's a real positive.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
KOSDAQ:A277070 Earnings and Revenue History December 10th 2020

Lindeman Asia Investment isn't a huge company, given its market capitalization of ₩80b. That makes it extra important to check on its balance sheet strength.

Are Lindeman Asia Investment Insiders Aligned With All Shareholders?

Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So as you can imagine, the fact that Lindeman Asia Investment insiders own a significant number of shares certainly appeals to me. Indeed, with a collective holding of 74%, company insiders are in control and have plenty of capital behind the venture. This makes me think they will be incentivised to plan for the long term - something I like to see. In terms of absolute value, insiders have ₩59b invested in the business, using the current share price. That's nothing to sneeze at!

Does Lindeman Asia Investment Deserve A Spot On Your Watchlist?

As I already mentioned, Lindeman Asia Investment is a growing business, which is what I like to see. Just as polish makes silverware pop, the high level of insider ownership enhances my enthusiasm for this growth. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. It is worth noting though that we have found 4 warning signs for Lindeman Asia Investment (1 is potentially serious!) that you need to take into consideration.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

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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