Here's Why We Think INCAR FINANCIAL SERVICE (KOSDAQ:211050) Is Well Worth Watching

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. 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. 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 INCAR FINANCIAL SERVICE (KOSDAQ:211050). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

INCAR FINANCIAL SERVICE's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. INCAR FINANCIAL SERVICE's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 53%. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that INCAR FINANCIAL SERVICE is growing revenues, and EBIT margins improved by 3.3 percentage points to 11%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Check out our latest analysis for INCAR FINANCIAL SERVICE

INCAR FINANCIAL SERVICE isn't a huge company, given its market capitalisation of ₩336b. That makes it extra important to check on its balance sheet strength.

Are INCAR FINANCIAL SERVICE 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 those who are interested in INCAR FINANCIAL SERVICE will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Actually, with 41% of the company to their names, insiders are profoundly invested in the business. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. In terms of absolute value, insiders have ₩137b invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Does INCAR FINANCIAL SERVICE Deserve A Spot On Your Watchlist?

INCAR FINANCIAL SERVICE's earnings per share growth have been climbing higher at an appreciable rate. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So at the surface level, INCAR FINANCIAL SERVICE is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want to check if INCAR FINANCIAL SERVICE is trading on a high P/E or a low P/E, relative to its industry.

Although INCAR FINANCIAL SERVICE 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.