With EPS Growth And More, Dyna-Mac Holdings (SGX:NO4) Makes An Interesting Case

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.' 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 Dyna-Mac Holdings (SGX:NO4). 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 our latest analysis for Dyna-Mac Holdings

How Fast Is Dyna-Mac Holdings Growing Its Earnings Per Share?

Dyna-Mac Holdings has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, Dyna-Mac Holdings' EPS shot from S$0.0053 to S$0.013, over the last year. Year on year growth of 136% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

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. The music to the ears of Dyna-Mac Holdings shareholders is that EBIT margins have grown from -1.2% to 2.1% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Dyna-Mac Holdings isn't a huge company, given its market capitalisation of S$342m. That makes it extra important to check on its balance sheet strength.

Are Dyna-Mac Holdings Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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.

Belief in the company remains high for insiders as there hasn't been a single share sold by the management or company board members. But the bigger deal is that the CEO & Executive Chairman, Ah Cheng Lim, paid S$94k to buy shares at an average price of S$0.19. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

Is Dyna-Mac Holdings Worth Keeping An Eye On?

Dyna-Mac Holdings' earnings per share have been soaring, with growth rates sky high. Most growth-seeking investors will find it hard to ignore that sort of explosive EPS growth. And may very well signal a significant inflection point for the business. If this is the case, then keeping a watch over Dyna-Mac Holdings could be in your best interest. However, before you get too excited we've discovered 1 warning sign for Dyna-Mac Holdings that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Dyna-Mac Holdings, 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.