Here's Why I Think Dongkuk Refractories & Steel (KOSDAQ:075970) Might Deserve Your Attention Today

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. 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 contrast to all that, I prefer to spend time on companies like Dongkuk Refractories & Steel (KOSDAQ:075970), which has not only revenues, but also profits. 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.

Check out our latest analysis for Dongkuk Refractories & Steel

How Quickly Is Dongkuk Refractories & Steel Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. Dongkuk Refractories & Steel managed to grow EPS by 9.5% per year, over three years. That's a pretty good rate, if the company can sustain it.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While Dongkuk Refractories & Steel may have maintained EBIT margins over the last year, revenue has fallen. And that does make me a little more cautious of the stock.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

Since Dongkuk Refractories & Steel is no giant, with a market capitalization of ₩62b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Dongkuk Refractories & Steel 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 Dongkuk Refractories & Steel insiders have a significant amount of capital invested in the stock. Indeed, they hold ₩15b worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 24% of the company, demonstrating a degree of high-level alignment with shareholders.

Does Dongkuk Refractories & Steel Deserve A Spot On Your Watchlist?

One positive for Dongkuk Refractories & Steel is that it is growing EPS. That's nice 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. What about risks? Every company has them, and we've spotted 2 warning signs for Dongkuk Refractories & Steel you should know about.

Although Dongkuk Refractories & Steel 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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