Does 4Sight Holdings (JSE:4SI) Deserve A Spot On Your Watchlist?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in 4Sight Holdings (JSE:4SI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide 4Sight Holdings with the means to add long-term value to shareholders.

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How Fast Is 4Sight Holdings Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. To the delight of shareholders, 4Sight Holdings has achieved impressive annual EPS growth of 56%, compound, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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. 4Sight Holdings maintained stable EBIT margins over the last year, all while growing revenue 6.3% to R1.0b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

View our latest analysis for 4Sight Holdings

Since 4Sight Holdings is no giant, with a market capitalisation of R373m, you should definitely check its cash and debt before getting too excited about its prospects.

Are 4Sight Holdings 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. 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 we did see insider selling of 4Sight Holdings stock in the last year, one single insider spent plenty more buying. Specifically the CFO, Financial Director & Executive Director, Eric van Merwe, spent R9.4m, paying about R0.61 per share. It's hard to ignore news like that.

And the insider buying isn't the only sign of alignment between shareholders and the board, since 4Sight Holdings insiders own more than a third of the company. Indeed, with a collective holding of 64%, company insiders are in control and have plenty of capital behind the venture. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Valued at only R373m 4Sight Holdings is really small for a listed company. So this large proportion of shares owned by insiders only amounts to R239m. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Tertius Zitzke is paid comparatively modestly to CEOs at similar sized companies. For companies with market capitalisations under R3.5b, like 4Sight Holdings, the median CEO pay is around R6.8m.

4Sight Holdings' CEO took home a total compensation package worth R4.8m in the year leading up to February 2025. That comes in below the average for similar sized companies and seems pretty reasonable. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Is 4Sight Holdings Worth Keeping An Eye On?

4Sight Holdings' earnings per share growth have been climbing higher at an appreciable rate. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe 4Sight Holdings deserves timely attention. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for 4Sight Holdings that you should be aware of.

The good news is that 4Sight Holdings is not the only stock with insider buying. Here's a list of small cap, undervalued companies in ZA 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. 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.