We Ran A Stock Scan For Earnings Growth And Bumitama Agri (SGX:P8Z) Passed With Ease

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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Bumitama Agri (SGX:P8Z). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Bumitama Agri

How Fast Is Bumitama Agri Growing Its Earnings Per Share?

In the last three years Bumitama Agri'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. Thus, it makes sense to focus on more recent growth rates, instead. To the delight of shareholders, Bumitama Agri's EPS soared from Rp986 to Rp1,630, over the last year. That's a fantastic gain of 65%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Bumitama Agri is growing revenues, and EBIT margins improved by 7.3 percentage points to 30%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

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 Bumitama Agri?

Are Bumitama Agri Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

It's nice to see that there have been no reports of any insiders selling shares in Bumitama Agri in the previous 12 months. So it's definitely nice that Lead Independent Director Hung Siang Lim bought Rp65k worth of shares at an average price of around Rp0.64. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Bumitama Agri.

Should You Add Bumitama Agri To Your Watchlist?

For growth investors, Bumitama Agri's raw rate of earnings growth is a beacon in the night. Not only is that growth rate rather juicy, but the insider buying adds fuel to the fire. To put it succinctly; Bumitama Agri is a strong candidate for your watchlist. Before you take the next step you should know about the 2 warning signs for Bumitama Agri (1 doesn't sit too well with us!) that we have uncovered.

Keen growth investors love to see insider buying. Thankfully, Bumitama Agri 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.

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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.