With EPS Growth And More, A-Sonic Aerospace (SGX:BTJ) Is Interesting

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. 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.

So if you're like me, you might be more interested in profitable, growing companies, like A-Sonic Aerospace (SGX:BTJ). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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 A-Sonic Aerospace

How Fast Is A-Sonic Aerospace Growing Its Earnings Per Share?

In the last three years A-Sonic Aerospace's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, A-Sonic Aerospace's EPS shot from US$0.044 to US$0.11, over the last year. You don't see 148% year-on-year growth like that, very often. The best case scenario? That the business has hit a true inflection point.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). A-Sonic Aerospace maintained stable EBIT margins over the last year, all while growing revenue 28% to US$263m. That's a real positive.

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.

Since A-Sonic Aerospace is no giant, with a market capitalization of S$36m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are A-Sonic Aerospace Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

We note that A-Sonic Aerospace insiders spent US$260k 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. Zooming in, we can see that the biggest insider purchase was by Co-Founder L. C. Tan for S$86k worth of shares, at about S$0.48 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 60%, 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 US$22m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Should You Add A-Sonic Aerospace To Your Watchlist?

A-Sonic Aerospace's earnings have taken off like any random crypto-currency did, back in 2017. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe A-Sonic Aerospace deserves timely attention. You should always think about risks though. Case in point, we've spotted 3 warning signs for A-Sonic Aerospace you should be aware of.

The good news is that A-Sonic Aerospace is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

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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