Here's Why We Think APM Automotive Holdings Berhad (KLSE:APM) Might Deserve Your Attention Today

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like APM Automotive Holdings Berhad (KLSE:APM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide APM Automotive Holdings Berhad with the means to add long-term value to shareholders.

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APM Automotive Holdings Berhad's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that APM Automotive Holdings Berhad's EPS has grown 35% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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 APM Automotive Holdings Berhad achieved similar EBIT margins to last year, revenue grew by a solid 8.6% to RM2.1b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Check out our latest analysis for APM Automotive Holdings Berhad

Since APM Automotive Holdings Berhad is no giant, with a market capitalisation of RM657m, you should definitely check its cash and debt before getting too excited about its prospects.

Are APM Automotive Holdings Berhad 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 APM Automotive Holdings Berhad insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at RM170m. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 26% of the shares on issue for the business, an appreciable amount considering the market cap.

Is APM Automotive Holdings Berhad Worth Keeping An Eye On?

For growth investors, APM Automotive Holdings Berhad's raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. Still, you should learn about the 1 warning sign we've spotted with APM Automotive Holdings Berhad.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Malaysian companies which have demonstrated growth backed by significant insider holdings.

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.