With EPS Growth And More, Harrisons Holdings (Malaysia) Berhad (KLSE:HARISON) Is Interesting

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily 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.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Harrisons Holdings (Malaysia) Berhad (KLSE:HARISON). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Harrisons Holdings (Malaysia) Berhad

Harrisons Holdings (Malaysia) Berhad's Earnings Per Share Are Growing.

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Harrisons Holdings (Malaysia) Berhad grew its EPS by 6.7% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Harrisons Holdings (Malaysia) Berhad maintained stable EBIT margins over the last year, all while growing revenue 2.6% to RM1.8b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Since Harrisons Holdings (Malaysia) Berhad is no giant, with a market capitalization of RM281m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Harrisons Holdings (Malaysia) Berhad Insiders Aligned With All Shareholders?

As a general rule, I think it worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. I discovered that the median total compensation for the CEOs of companies like Harrisons Holdings (Malaysia) Berhad with market caps under RM822m is about RM580k.

Harrisons Holdings (Malaysia) Berhad offered total compensation worth RM356k to its CEO in the year to . That comes in below the average for similar sized companies, and seems pretty reasonable to me. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does Harrisons Holdings (Malaysia) Berhad Deserve A Spot On Your Watchlist?

One important encouraging feature of Harrisons Holdings (Malaysia) Berhad is that it is growing profits. On top of that, my faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So all in all I think it's worth at least considering for your watchlist. Even so, be aware that Harrisons Holdings (Malaysia) Berhad is showing 2 warning signs in our investment analysis , you should know about...

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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