With EPS Growth And More, HLT Global Berhad (KLSE:HLT) Is Interesting

By
Simply Wall St
Published
November 21, 2021
KLSE:HLT
Source: Shutterstock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. 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 HLT Global Berhad (KLSE:HLT). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

View our latest analysis for HLT Global Berhad

How Fast Is HLT Global Berhad Growing Its Earnings Per Share?

In the last three years HLT Global Berhad's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like the last firework on New Year's Eve accelerating into the sky, HLT Global Berhad's EPS shot from RM0.016 to RM0.046, over the last year. Year on year growth of 188% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that HLT Global Berhad is growing revenues, and EBIT margins improved by 19.5 percentage points to 26%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
KLSE:HLT Earnings and Revenue History November 22nd 2021

Since HLT Global Berhad is no giant, with a market capitalization of RM343m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are HLT Global Berhad Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that HLT Global Berhad insiders own a meaningful share of the business. In fact, they own 48% of the shares, making insiders a very influential shareholder group. I'm always comforted by solid insider ownership like this, as it implies that those running the business are genuinely motivated to create shareholder value. In terms of absolute value, insiders have RM164m invested in the business, using the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Is HLT Global Berhad Worth Keeping An Eye On?

HLT Global Berhad's earnings have taken off like any random crypto-currency did, back in 2017. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it's worth considering HLT Global Berhad for a spot on your watchlist. It is worth noting though that we have found 4 warning signs for HLT Global Berhad (1 doesn't sit too well with us!) that you need to take into consideration.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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