If EPS Growth Is Important To You, AEON Credit Service (M) Berhad (KLSE:AEONCR) Presents An Opportunity

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

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 AEON Credit Service (M) Berhad (KLSE:AEONCR). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for AEON Credit Service (M) Berhad

How Quickly Is AEON Credit Service (M) Berhad Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that AEON Credit Service (M) Berhad's EPS has grown 26% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.

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. It's noted that AEON Credit Service (M) Berhad's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. AEON Credit Service (M) Berhad maintained stable EBIT margins over the last year, all while growing revenue 9.6% to RM1.5b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Fortunately, we've got access to analyst forecasts of AEON Credit Service (M) Berhad's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are AEON Credit Service (M) Berhad Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. Our analysis has discovered that the median total compensation for the CEOs of companies like AEON Credit Service (M) Berhad with market caps between RM1.9b and RM7.6b is about RM1.9m.

AEON Credit Service (M) Berhad's CEO took home a total compensation package worth RM1.3m in the year leading up to February 2023. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add AEON Credit Service (M) Berhad To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into AEON Credit Service (M) Berhad's strong EPS growth. With swiftly growing earnings, the best days may still be to come, and the modest CEO pay suggests the company is careful with cash. So this stock is well worth an addition to your watchlist as it has the potential to provide great value to shareholders. Even so, be aware that AEON Credit Service (M) Berhad is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

Although AEON Credit Service (M) Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Malaysian companies that not only boast of strong growth but have also seen recent insider buying..

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.