If You Like EPS Growth Then Check Out Ban Leong Technologies (SGX:B26) Before It's Too Late

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Ban Leong Technologies (SGX:B26), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Ban Leong Technologies

How Quickly Is Ban Leong Technologies Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Ban Leong Technologies has grown EPS by 5.9% per year. While that sort of growth rate isn't amazing, it does show the business is growing.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Ban Leong Technologies shareholders can take confidence from the fact that EBIT margins are up from 2.1% to 4.4%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my 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.

Since Ban Leong Technologies is no giant, with a market capitalization of S$39m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Ban Leong Technologies 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. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We note that Ban Leong Technologies insiders spent S$145k on stock, over the last year; in contrast, we didn't see any selling. That puts the company in a nice light, as it makes me think its leaders are feeling confident. It is also worth noting that it was Founder Woo Boon Teng who made the biggest single purchase, worth S$56k, paying S$0.25 per share.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Ban Leong Technologies insiders own more than a third of the company. Indeed, with a collective holding of 80%, company insiders are in control and have plenty of capital behind the venture. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about S$31m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Is Ban Leong Technologies Worth Keeping An Eye On?

As I already mentioned, Ban Leong Technologies is a growing business, which is what I like to see. On top of that, we've seen insiders buying shares even though they already own plenty. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. Before you take the next step you should know about the 3 warning signs for Ban Leong Technologies that we have uncovered.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Ban Leong Technologies, 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. 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.
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