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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 First Pacific (HKG:142). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide First Pacific with the means to add long-term value to shareholders.
See our latest analysis for First Pacific
How Fast Is First Pacific Growing Its Earnings Per Share?
First Pacific has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. First Pacific's EPS skyrocketed from US$0.092 to US$0.12, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 27%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While we note First Pacific achieved similar EBIT margins to last year, revenue grew by a solid 7.0% to US$11b. That's a real positive.
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.
While profitability drives the upside, prudent investors always check the balance sheet, too.
Are First Pacific Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that First Pacific insiders have a significant amount of capital invested in the stock. Notably, they have an enviable stake in the company, worth US$3.7b. Coming in at 29% of the business, that holding gives insiders a lot of influence, and plenty of reason to generate value for shareholders. Very encouraging.
Does First Pacific Deserve A Spot On Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into First Pacific's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in First Pacific's continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. You still need to take note of risks, for example - First Pacific has 2 warning signs (and 1 which is potentially serious) we think you should know about.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.
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.
投資家はしばしば、収益を得ず、利益もない「ストーリーストック」を購入することで、「次の大きなもの」を見つけるという考え方に導かれます。しかし、ペーター・リンチがOne Up On Wall Streetで言ったように、「長期投資はほとんどまず成功しない。」損失を出している企業はまだ利益を証明していないため、外部資本の流入がいずれ枯渇する可能性があります。ファースト・パシフィック(HKG:142)のように、収益を生み出し、利益を上げる企業が好きであれば、この種の企業があなたのスタイルではありません。これは相場レベルで公正な価値が付けられているとしても、投資家は、一貫した利益を生み出すことが、ファースト・パシフィックに株主への長期的な価値を追加する手段を提供すると合意するでしょう。ファースト・パシフィックは、過去3年間に株式利益率の急激な成長を経験しています。その成長率は公正な評価ではありませんが、代わりに過去1年間の成長に焦点を当てることにします。ファースト・パシフィックのEPSはわずか1年でUS 0.092ドルからUS 0.12ドルに急上昇し、株主に微笑をもたらす結果となりました。このため、株主に微笑をもたらす結果となりました。このため、株主に微笑をもたらす結果となりました。このため、株主に微笑をもたらす結果となりました。27%の立派な利益です。
First Pacific Insidersの株主との一体化はすべての株主に対して直感的な安心感を与えるべきです。そのため、Insidersが自分たちの利益を合わせて持っていることは良いことです。First PacificのInsidersが持っている資本は相当な金額であり、US3.7Bドルに相当する金額になっています。その持ち株はビジネス全体の29%を占め、Insidersに多大な影響力を与え、株主に価値を提供する理由がたくさんあるということです。非常に励みになります。