Here's Why We Think BioSmartLtd (KOSDAQ:038460) Is Well Worth Watching

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 currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like BioSmartLtd (KOSDAQ:038460), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide BioSmartLtd with the means to add long-term value to shareholders.

See our latest analysis for BioSmartLtd

How Fast Is BioSmartLtd Growing Its Earnings Per Share?

Over the last three years, BioSmartLtd has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. BioSmartLtd boosted its trailing twelve month EPS from ₩318 to ₩389, in the last year. This amounts to a 22% gain; a figure that shareholders will be pleased to see.

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 we note BioSmartLtd achieved similar EBIT margins to last year, revenue grew by a solid 10% to ₩474b. That's a real positive.

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

BioSmartLtd isn't a huge company, given its market capitalisation of ₩97b. That makes it extra important to check on its balance sheet strength.

Are BioSmartLtd Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own BioSmartLtd shares worth a considerable sum. To be specific, they have ₩20b worth of shares. This considerable investment should help drive long-term value in the business. Those holdings account for over 21% of the company; visible skin in the game.

Does BioSmartLtd Deserve A Spot On Your Watchlist?

One positive for BioSmartLtd is that it is growing EPS. That's nice to see. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. It is worth noting though that we have found 5 warning signs for BioSmartLtd (1 doesn't sit too well with us!) that you need to take into consideration.

Although BioSmartLtd 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.