Here's Why I Think P.I.E. Industrial Berhad (KLSE:PIE) Is An Interesting Stock

Published
June 02, 2022
KLSE:PIE
Source: Shutterstock

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in P.I.E. Industrial Berhad (KLSE:PIE). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for P.I.E. Industrial Berhad

How Fast Is P.I.E. Industrial Berhad Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, P.I.E. Industrial Berhad has grown EPS by 22% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

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 P.I.E. Industrial Berhad's EBIT margins were flat over the last year, revenue grew by a solid 21% to RM1.0b. That's a real positive.

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.

earnings-and-revenue-history
KLSE:PIE Earnings and Revenue History June 2nd 2022

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for P.I.E. Industrial Berhad.

Are P.I.E. Industrial Berhad Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own P.I.E. Industrial Berhad shares worth a considerable sum. To be specific, they have RM110m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 9.0% of the company; visible skin in the game.

Does P.I.E. Industrial Berhad Deserve A Spot On Your Watchlist?

You can't deny that P.I.E. Industrial Berhad has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. However, before you get too excited we've discovered 2 warning signs for P.I.E. Industrial Berhad (1 is a bit unpleasant!) that you should be aware of.

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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About KLSE:PIE

P.I.E. Industrial Berhad

P.I.E. Industrial Berhad, an investment holding company, manufactures and sells industrial electronic products primarily in Malaysia, Thailand, and Singapore.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth3
Past Performance2
Financial Health5
Dividends1

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet and fair value.