If EPS Growth Is Important To You, NewFlex Technology (KOSDAQ:085670) Presents An Opportunity

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in NewFlex Technology (KOSDAQ:085670). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide NewFlex Technology with the means to add long-term value to shareholders.

View our latest analysis for NewFlex Technology

NewFlex Technology's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Impressively, NewFlex Technology has grown EPS by 33% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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. NewFlex Technology's EBIT margins have actually improved by 7.9 percentage points in the last year, to reach 10%, but, on the flip side, revenue was down 12%. That falls short of ideal.

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.

Since NewFlex Technology is no giant, with a market capitalisation of ₩146b, you should definitely check its cash and debt before getting too excited about its prospects.

Are NewFlex Technology 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. So it is good to see that NewFlex Technology insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at ₩46b. That's a lot of money, and no small incentive to work hard. Those holdings account for over 32% of the company; visible skin in the game.

Should You Add NewFlex Technology To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into NewFlex Technology's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in NewFlex Technology's continuing strength. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. We should say that we've discovered 1 warning sign for NewFlex Technology that you should be aware of before investing here.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in KR with promising growth potential and insider confidence.

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.