Does ABOV Semiconductor (KOSDAQ:102120) Deserve A Spot On Your Watchlist?

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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like ABOV Semiconductor (KOSDAQ:102120). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. 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 ABOV Semiconductor

How Fast Is ABOV Semiconductor Growing Its Earnings Per Share?

Over the last three years, ABOV Semiconductor 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. ABOV Semiconductor has grown its trailing twelve month EPS from ₩817 to ₩850, in the last year. That amounts to a small improvement of 4.1%.

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. While we note ABOV Semiconductor's EBIT margins were flat over the last year, revenue grew by a solid 14% to ₩144b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

ABOV Semiconductor isn't a huge company, given its market capitalization of ₩275b. That makes it extra important to check on its balance sheet strength.

Are ABOV Semiconductor 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. So it is good to see that ABOV Semiconductor insiders have a significant amount of capital invested in the stock. Given insiders own a small fortune of shares, currently valued at ₩67b, they have plenty of motivation to push the business to succeed. That holding amounts to 24% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Does ABOV Semiconductor Deserve A Spot On Your Watchlist?

One important encouraging feature of ABOV Semiconductor is that it is growing profits. Just as polish makes silverware pop, the high level of insider ownership enhances my enthusiasm for this growth. The combination sparks joy for me, so I'd consider keeping the company on a watchlist. We should say that we've discovered 1 warning sign for ABOV Semiconductor that you should be aware of before investing here.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

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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