Here's Why Casa Holdings (SGX:C04) 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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Casa Holdings (SGX:C04), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Casa Holdings with the means to add long-term value to shareholders.

Check out our latest analysis for Casa Holdings

How Quickly Is Casa Holdings 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. Over the last three years, Casa Holdings has grown EPS by 9.7% per year. That's a pretty good rate, if the company can sustain it.

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. Casa Holdings maintained stable EBIT margins over the last year, all while growing revenue 8.2% to S$23m. That's progress.

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

Since Casa Holdings is no giant, with a market capitalisation of S$17m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Casa Holdings 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.

The good news for Casa Holdings shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Hock Meng Lai, the Independent Chairman of the company, paid S$26k for shares at around S$0.075 each. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.

These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Casa Holdings will reveal that insiders own a significant piece of the pie. Indeed, with a collective holding of 76%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Valued at only S$17m Casa Holdings is really small for a listed company. So this large proportion of shares owned by insiders only amounts to S$13m. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Is Casa Holdings Worth Keeping An Eye On?

One positive for Casa Holdings is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. It is worth noting though that we have found 5 warning signs for Casa Holdings (3 make us uncomfortable!) that you need to take into consideration.

Keen growth investors love to see insider buying. Thankfully, Casa Holdings isn't the only one. You can see a a curated list of Singaporean companies which have exhibited consistent growth accompanied by 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.