Here's Why Oversea-Chinese Banking (SGX:O39) Has Caught The Eye Of Investors

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Oversea-Chinese Banking (SGX:O39). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Oversea-Chinese Banking with the means to add long-term value to shareholders.

Check out our latest analysis for Oversea-Chinese Banking

How Quickly Is Oversea-Chinese Banking Increasing Earnings Per Share?

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. It certainly is nice to see that Oversea-Chinese Banking has managed to grow EPS by 23% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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 Oversea-Chinese Banking's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Oversea-Chinese Banking achieved similar EBIT margins to last year, revenue grew by a solid 24% to S$13b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

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 Oversea-Chinese Banking?

Are Oversea-Chinese Banking Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a S$60b company like Oversea-Chinese Banking. But we do take comfort from the fact that they are investors in the company. We note that their impressive stake in the company is worth S$190m. This comes in at 0.3% of shares in the company, which is a fair amount of a business of this size. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Should You Add Oversea-Chinese Banking To Your Watchlist?

You can't deny that Oversea-Chinese Banking has grown its earnings per share at a very impressive rate. That's attractive. 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. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. We don't want to rain on the parade too much, but we did also find 1 warning sign for Oversea-Chinese Banking that you need to be mindful of.

Although Oversea-Chinese Banking 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 Singaporean 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.