Here's Why We Think A-Sonic Aerospace (SGX:BTJ) Might Deserve Your Attention Today

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 currently lacks a track record of revenue and profit. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like A-Sonic Aerospace (SGX:BTJ), which has not only revenues, but also profits. 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.

See our latest analysis for A-Sonic Aerospace

How Quickly Is A-Sonic Aerospace Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. To the delight of shareholders, A-Sonic Aerospace has achieved impressive annual EPS growth of 56%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

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. EBIT margins for A-Sonic Aerospace remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 45% to US$489m. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

A-Sonic Aerospace isn't a huge company, given its market capitalisation of S$56m. That makes it extra important to check on its balance sheet strength.

Are A-Sonic Aerospace 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. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

While A-Sonic Aerospace insiders did net US$288k selling stock over the last year, they invested US$1.2m, a much higher figure. You could argue that level of buying implies genuine confidence in the business. It is also worth noting that it was Co-Founder L. C. Tan who made the biggest single purchase, worth S$823k, paying S$0.80 per share.

And the insider buying isn't the only sign of alignment between shareholders and the board, since A-Sonic Aerospace insiders own more than a third of the company. Indeed, with a collective holding of 66%, company insiders are in control and have plenty of capital behind the venture. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have US$37m invested in the business, at the current share price. So there's plenty there to keep them focused!

Should You Add A-Sonic Aerospace To Your Watchlist?

A-Sonic Aerospace's earnings have taken off in quite an impressive fashion. What's more, insiders own a significant stake in the company and have been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest A-Sonic Aerospace belongs near the top of your watchlist. Before you take the next step you should know about the 2 warning signs for A-Sonic Aerospace that we have uncovered.

Keen growth investors love to see insider buying. Thankfully, A-Sonic Aerospace 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.