Do Kelington Group Berhad's (KLSE:KGB) Earnings Warrant Your Attention?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 Kelington Group Berhad (KLSE:KGB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kelington Group Berhad with the means to add long-term value to shareholders.

Check out our latest analysis for Kelington Group Berhad

Kelington Group Berhad's Improving Profits

Over the last three years, Kelington Group Berhad 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. As a result, we'll zoom in on growth over the last year, instead. Impressively, Kelington Group Berhad's EPS catapulted from RM0.099 to RM0.17, over the last year. It's not often a company can achieve year-on-year growth of 68%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Kelington Group Berhad shareholders can take confidence from the fact that EBIT margins are up from 6.5% to 9.5%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Kelington Group Berhad's future EPS 100% free.

Are Kelington Group 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 Kelington Group Berhad insiders have a significant amount of capital invested in the stock. Indeed, they hold RM99m worth of its stock. This considerable investment should help drive long-term value in the business. Despite being just 4.8% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does Kelington Group Berhad Deserve A Spot On Your Watchlist?

Kelington Group Berhad's earnings per share growth have been climbing higher at an appreciable rate. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Kelington Group Berhad for a spot on your watchlist. Before you take the next step you should know about the 2 warning signs for Kelington Group Berhad that we have uncovered.

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 MY 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com