Stock Analysis

Here's Why We Think 7-Eleven Malaysia Holdings Berhad (KLSE:SEM) Is Well Worth Watching

KLSE:SEM
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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 currently lacks a track record of revenue and profit. 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 7-Eleven Malaysia Holdings Berhad (KLSE:SEM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide 7-Eleven Malaysia Holdings Berhad with the means to add long-term value to shareholders.

View our latest analysis for 7-Eleven Malaysia Holdings Berhad

How Quickly Is 7-Eleven Malaysia Holdings Berhad Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Impressively, 7-Eleven Malaysia Holdings Berhad has grown EPS by 20% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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. The music to the ears of 7-Eleven Malaysia Holdings Berhad shareholders is that EBIT margins have grown from 4.7% to 6.8% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

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.

earnings-and-revenue-history
KLSE:SEM Earnings and Revenue History December 23rd 2022

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for 7-Eleven Malaysia Holdings Berhad?

Are 7-Eleven Malaysia Holdings Berhad Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that 7-Eleven Malaysia Holdings Berhad insiders have a significant amount of capital invested in the stock. Notably, they have an enviable stake in the company, worth RM661m. This totals to 31% of shares in the company. Enough to lead management's decision making process down a path that brings the most benefit to shareholders. Looking very optimistic for investors.

Should You Add 7-Eleven Malaysia Holdings Berhad To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into 7-Eleven Malaysia Holdings Berhad's strong EPS growth. 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. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. You should always think about risks though. Case in point, we've spotted 2 warning signs for 7-Eleven Malaysia Holdings Berhad you should be aware of.

The beauty of investing is that you can invest in almost 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.

Valuation is complex, but we're helping make it simple.

Find out whether 7-Eleven Malaysia Holdings Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.