Stock Analysis

I Ran A Stock Scan For Earnings Growth And Seegene (KOSDAQ:096530) Passed With Ease

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KOSDAQ:A096530
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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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In contrast to all that, I prefer to spend time on companies like Seegene (KOSDAQ:096530), 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. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for Seegene

Seegene's Improving Profits

In business, though not in life, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS). So like a ray of sunshine through a gap in the clouds, improving EPS is considered a good sign. It is therefore awe-striking that Seegene's EPS went from ₩1,026 to ₩12,370 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.

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. The good news is that Seegene is growing revenues, and EBIT margins improved by 40.3 percentage points to 59%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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

earnings-and-revenue-history
KOSDAQ:A096530 Earnings and Revenue History November 24th 2020

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Seegene's forecast profits?

Are Seegene 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 Seegene insiders own a significant number of shares certainly appeals to me. In fact, they own 37% of the shares, making insiders a very influential shareholder group. I'm always comforted by solid insider ownership like this, as it implies that those running the business are genuinely motivated to create shareholder value. At the current share price, that insider holding is worth a whopping ₩2.1t. That means they have plenty of their own capital riding on the performance of the business!

Does Seegene Deserve A Spot On Your Watchlist?

Seegene's earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it's worth considering Seegene for a spot on your watchlist. However, before you get too excited we've discovered 3 warning signs for Seegene (2 are potentially serious!) that you should be aware of.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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About KOSDAQ:A096530

Seegene

Seegene, Inc. manufactures and sells molecular diagnostics products worldwide.

Flawless balance sheet, good value and pays a dividend.

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