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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
In contrast to all that, many investors prefer to focus on companies like Omnibridge Holdings (HKG:8462), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Omnibridge Holdings with the means to add long-term value to shareholders.
View our latest analysis for Omnibridge Holdings
Omnibridge Holdings' Earnings Per Share Are Growing
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Recognition must be given to the that Omnibridge Holdings has grown EPS by 38% per year, 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. Omnibridge Holdings' EBIT margins are flat but, worryingly, its revenue is actually down. This does not bode too well for short term growth prospects and so understanding the reasons for these results is of great importance.
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 Omnibridge Holdings is no giant, with a market capitalisation of HK$43m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Omnibridge Holdings Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The good news for Omnibridge Holdings shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that company insider Daoji Lin bought S$83k worth of shares at an average price of around S$0.078. It seems that at least one insider is prepared to show the market there is potential within Omnibridge Holdings.
Does Omnibridge Holdings Deserve A Spot On Your Watchlist?
Omnibridge Holdings' earnings per share have been soaring, with growth rates sky high. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If this is the case, then keeping a watch over Omnibridge Holdings could be in your best interest. Before you take the next step you should know about the 2 warning signs for Omnibridge Holdings (1 shouldn't be ignored!) that we have uncovered.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Omnibridge Holdings, you'll probably love this curated collection of companies in HK that have an attractive valuation alongside 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.