Here's Why Kuala Lumpur Kepong Berhad (KLSE:KLK) Has Caught The Eye Of Investors

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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Kuala Lumpur Kepong Berhad (KLSE:KLK). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kuala Lumpur Kepong Berhad with the means to add long-term value to shareholders.

See our latest analysis for Kuala Lumpur Kepong Berhad

How Fast Is Kuala Lumpur Kepong Berhad Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. To the delight of shareholders, Kuala Lumpur Kepong Berhad has achieved impressive annual EPS growth of 59%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

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 Kuala Lumpur Kepong Berhad achieved similar EBIT margins to last year, revenue grew by a solid 45% to RM26b. That's a real positive.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Kuala Lumpur Kepong Berhad's forecast profits?

Are Kuala Lumpur Kepong Berhad Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a RM24b company like Kuala Lumpur Kepong Berhad. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. As a matter of fact, their holding is valued at RM128m. This considerable investment should help drive long-term value in the business. Even though that's only about 0.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Is Kuala Lumpur Kepong Berhad Worth Keeping An Eye On?

Kuala Lumpur Kepong Berhad's earnings per share have been soaring, with growth rates sky high. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, Kuala Lumpur Kepong Berhad is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Kuala Lumpur Kepong Berhad (2 are potentially serious) 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.

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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.