Here's Why We Think United Overseas Bank (SGX:U11) Might Deserve Your Attention Today

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.

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 United Overseas Bank (SGX:U11). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out the opportunities and risks within the XX Banks industry.

How Fast Is United Overseas Bank Growing Its Earnings Per Share?

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's easy to see why many investors focus in on EPS growth. United Overseas Bank's EPS has risen over the last 12 months, growing from S$2.17 to S$2.61. That's a 20% gain; respectable growth in the broader scheme of things.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Not all of United Overseas Bank's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for United Overseas Bank remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 17% to S$10b. That's encouraging news for the company!

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.

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

Are United Overseas Bank Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

It's pleasing to note that insiders spent S$3.3m buying United Overseas Bank shares, over the last year, without reporting any share sales whatsoever. Knowing this, United Overseas Bank will have have all eyes on them in anticipation for the what could happen in the near future. We also note that it was the Deputy Chairman & CEO, Ee Cheong Wee, who made the biggest single acquisition, paying S$1.3m for shares at about S$26.95 each.

The good news, alongside the insider buying, for United Overseas Bank bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth S$8.0b. That equates to 16% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.

Does United Overseas Bank Deserve A Spot On Your Watchlist?

As previously touched on, United Overseas Bank is a growing business, which is encouraging. Better yet, insiders are significant shareholders, and have been buying more shares. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. We should say that we've discovered 1 warning sign for United Overseas Bank that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of United Overseas Bank, you'll probably love this free list of growing companies that insiders are 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.