Should You Be Adding NEOWIZ HOLDINGS (KOSDAQ:042420) To Your Watchlist Today?

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. 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 NEOWIZ HOLDINGS (KOSDAQ:042420), 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. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

View our latest analysis for NEOWIZ HOLDINGS

NEOWIZ HOLDINGS's Improving Profits

Over the last three years, NEOWIZ HOLDINGS 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 falcon taking flight, NEOWIZ HOLDINGS's EPS soared from ₩3,616 to ₩5,630, over the last year. That's a commendable gain of 56%.

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. NEOWIZ HOLDINGS shareholders can take confidence from the fact that EBIT margins are up from 12% to 19%, and revenue is growing. That's great to see, on both counts.

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

NEOWIZ HOLDINGS isn't a huge company, given its market capitalization of ₩126b. That makes it extra important to check on its balance sheet strength.

Are NEOWIZ HOLDINGS Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that NEOWIZ HOLDINGS insiders own a significant number of shares certainly appeals to me. In fact, they own 51% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. 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 ₩64b invested in the business, using the current share price. That's nothing to sneeze at!

Is NEOWIZ HOLDINGS Worth Keeping An Eye On?

You can't deny that NEOWIZ HOLDINGS has grown its earnings per share at a very impressive rate. That's attractive. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Before you take the next step you should know about the 2 warning signs for NEOWIZ HOLDINGS (1 is a bit unpleasant!) that we have uncovered.

Although NEOWIZ HOLDINGS 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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