Does Coraza Integrated Technology Berhad (KLSE:CORAZA) Deserve A Spot On Your Watchlist?
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. 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Coraza Integrated Technology Berhad (KLSE:CORAZA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Coraza Integrated Technology Berhad with the means to add long-term value to shareholders.
See our latest analysis for Coraza Integrated Technology Berhad
How Fast Is Coraza Integrated Technology Berhad Growing Its Earnings Per Share?
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's easy to see why many investors focus in on EPS growth. Coraza Integrated Technology Berhad's EPS skyrocketed from RM0.024 to RM0.033, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 40%.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Coraza Integrated Technology Berhad remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 55% to RM142m. That's encouraging news for the company!
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Coraza Integrated Technology Berhad.
Are Coraza Integrated Technology Berhad Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Coraza Integrated Technology Berhad insiders own a meaningful share of the business. To be exact, company insiders hold 78% of the company, so their decisions have a significant impact on their investments. 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. To give you an idea, the value of insiders' holdings in the business are valued at RM321m at the current share price. That's nothing to sneeze at!
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. For companies with market capitalisations under RM859m, like Coraza Integrated Technology Berhad, the median CEO pay is around RM494k.
The Coraza Integrated Technology Berhad CEO received total compensation of only RM35k in the year to December 2021. This could be considered a token amount, and indicates that the company does not need to use payment to motivate the CEO - that is often a good sign. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Is Coraza Integrated Technology Berhad Worth Keeping An Eye On?
For growth investors, Coraza Integrated Technology Berhad's raw rate of earnings growth is a beacon in the night. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. Everyone has their own preferences when it comes to investing but it definitely makes Coraza Integrated Technology Berhad look rather interesting indeed. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Coraza Integrated Technology Berhad (1 is a bit unpleasant) you should be aware of.
The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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