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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Astra Industrial Group (TADAWUL:1212). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Astra Industrial Group with the means to add long-term value to shareholders.
Our analysis indicates that 1212 is potentially undervalued!
How Fast Is Astra Industrial Group Growing Its Earnings Per Share?
In the last three years Astra Industrial Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Astra Industrial Group boosted its trailing twelve month EPS from ر.س2.64 to ر.س2.93, in the last year. This amounts to a 11% gain; a figure that shareholders will be pleased to see.
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. EBIT margins for Astra Industrial Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 2.9% to ر.س2.5b. That's progress.
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.
While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Astra Industrial Group's balance sheet strength, before getting too excited.
Are Astra Industrial Group Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Astra Industrial Group followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. We note that their impressive stake in the company is worth ر.س431m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!
Should You Add Astra Industrial Group To Your Watchlist?
One positive for Astra Industrial Group is that it is growing EPS. That's nice to see. To add an extra spark to the fire, significant insider ownership in the company is another highlight. These two factors are a huge highlight for the company which should be a strong contender your watchlists. We should say that we've discovered 2 warning signs for Astra Industrial Group that you should be aware of before investing here.
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.
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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.
Astra Industrial Group
Astra Industrial Group Company, through its subsidiaries, engages in the pharmaceuticals, specialty chemicals, power and steel, mining, and other businesses in the Kingdom of Saudi Arabia, Africa, the United States, Asia, Europe, and internationally.
Flawless balance sheet with acceptable track record.