Do ValueMax Group's (SGX:T6I) Earnings Warrant Your Attention?

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like ValueMax Group (SGX:T6I). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for ValueMax Group

ValueMax Group's Earnings Per Share Are Growing.

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. ValueMax Group managed to grow EPS by 12% per year, over three years. That's a good rate of growth, if it can be sustained.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. ValueMax Group maintained stable EBIT margins over the last year, all while growing revenue 11% to S$225m. 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.

ValueMax Group isn't a huge company, given its market capitalization of S$189m. That makes it extra important to check on its balance sheet strength.

Are ValueMax Group Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Like a sturdy phalanx ValueMax Group insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the MD, CEO & Executive Director, Hiang Nam Yeah, paid S$185k to buy shares at an average price of S$0.24.

The good news, alongside the insider buying, for ValueMax Group bulls is that insiders (collectively) have a meaningful investment in the stock. To be specific, they have S$37m worth of shares. That's a lot of money, and no small incentive to work hard. That amounts to 19% of the company, demonstrating a degree of high-level alignment with shareholders.

Is ValueMax Group Worth Keeping An Eye On?

As I already mentioned, ValueMax Group is a growing business, which is what I like to see. Better yet, insiders are significant shareholders, and have been buying more shares. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. Even so, be aware that ValueMax Group is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

As a growth investor I do like to see insider buying. But ValueMax Group isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

If you’re looking to trade ValueMax Group, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.