If EPS Growth Is Important To You, Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) Presents An Opportunity

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

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

View our latest analysis for Press Metal Aluminium Holdings Berhad

Press Metal Aluminium Holdings Berhad's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Recognition must be given to the that Press Metal Aluminium Holdings Berhad has grown EPS by 41% per year, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Press Metal Aluminium Holdings Berhad remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 56% to RM15b. That's a real positive.

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.

Fortunately, we've got access to analyst forecasts of Press Metal Aluminium Holdings 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 Press Metal Aluminium Holdings Berhad Insiders Aligned With All Shareholders?

Owing to the size of Press Metal Aluminium Holdings Berhad, we wouldn't expect insiders to hold a significant proportion of the company. But we do take comfort from the fact that they are investors in the company. Indeed, they have a considerable amount of wealth invested in it, currently valued at RM10b. This totals to 25% of shares in the company. Enough to lead management's decision making process down a path that brings the most benefit to shareholders. So there is opportunity here to invest in a company whose management have tangible incentives to deliver.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. The median total compensation for CEOs of companies similar in size to Press Metal Aluminium Holdings Berhad, with market caps between RM17b and RM52b, is around RM3.5m.

Press Metal Aluminium Holdings Berhad offered total compensation worth RM2.5m to its CEO in the year to December 2021. That is actually below the median for CEO's of similarly sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Press Metal Aluminium Holdings Berhad To Your Watchlist?

Press Metal Aluminium Holdings Berhad's earnings per share growth have been climbing higher at an appreciable rate. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The drastic earnings growth indicates the business is going from strength to strength. Hopefully a trend that continues well into the future. Press Metal Aluminium Holdings Berhad is certainly doing some things right and is well worth investigating. Before you take the next step you should know about the 2 warning signs for Press Metal Aluminium Holdings Berhad that we have uncovered.

Although Press Metal Aluminium Holdings Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.