Here's Why We Think KTB Investment & Securities (KRX:030210) Is Well Worth Watching

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like KTB Investment & Securities (KRX:030210). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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.

See our latest analysis for KTB Investment & Securities

How Quickly Is KTB Investment & Securities Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. It certainly is nice to see that KTB Investment & Securities has managed to grow EPS by 37% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.

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 KTB Investment & Securities'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 KTB Investment & Securities's EBIT margins were flat over the last year, revenue grew by a solid 34% to ₩440b. 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.

Since KTB Investment & Securities is no giant, with a market capitalization of ₩200b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are KTB Investment & Securities Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own KTB Investment & Securities shares worth a considerable sum. Indeed, they hold ₩48b worth of its stock. That's a lot of money, and no small incentive to work hard. Those holdings account for over 24% of the company; visible skin in the game.

Is KTB Investment & Securities Worth Keeping An Eye On?

You can't deny that KTB Investment & Securities has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. Still, you should learn about the 4 warning signs we've spotted with KTB Investment & Securities (including 1 which is a bit concerning) .

Although KTB Investment & Securities certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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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