Some have more money than common sense, they say, so even companies with no income, no profit, and a history of default can easily find investors. But as Warren Buffett said, “If you’ve been playing poker for half an hour and you still don’t know what’s the noise, you’re the noise.” When buying such historical stocks, investors are too often the fools.
So if you’re like me, you might be more interested in profitable and growing businesses like QL Berhad Resources (KLSE: QL). While that doesn’t make stocks worth buying at all costs, you can’t deny that successful capitalism ultimately requires profits. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.
Check out our latest review for QL Resources Berhad
How fast is QL Resources Berhad growing?
The market is a short-term voting machine, but a long-term weighing machine, so the stock price eventually follows earnings per share (EPS). So it’s no surprise that I like to invest in companies with growing EPS. QL Resources Berhad has managed to increase its EPS by 15% per year, over three years. It’s a great rate, if the company can keep it up.
One way to check how a business is growing is to look at how its income and profit before interest and tax (EBIT) have changed. Although we note that QL Resources Berhad’s EBIT margins were stable over the past year, revenues increased 12% to RM 4.6 billion. It is progress.
You can check out the revenue and profit growth trend of the company in the chart below. For more details, click on the image.
The trick, as an investor, is to find companies that go to perform well in the future, not just in the past. To that end, now and today you can check out our visualization of consensus analysts’ forecasts for future QL Resources Berhad EPS 100% free of charge.
Are QL Resources Berhad Insiders Aligned with All Shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. So it’s good to see that QL Resources Berhad insiders have significant capital invested in the stock. Notably, they have a huge stake in the company, worth RM502 million. This suggests to me that management will be very attentive to the interests of shareholders when making a decision!
It’s good to see insiders invested in the company, but are the pay levels reasonable? A brief analysis of CEO compensation suggests they are. I found out that the median total compensation of CEOs of companies like QL Resources Berhad with market caps between RM 8.3 billion and RM 27 billion is around RM 4.1 million.
QL Resources CEO Berhad received RM 2.7 million in compensation for the end of the year. This is lower than the average for similar sized companies and seems pretty reasonable to me. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. It can also be a sign of good governance, more generally.
Should you add QL Resources Berhad to your watchlist?
As I mentioned before, QL Resources Berhad is a growing company, that’s what I like to see. Profit growth may be QL Resources Berhad’s primary focus, but the fun not stop there. With a significant level of insider ownership and reasonable CEO compensation, a reasonable mind might conclude that this is a stock to watch. We should say that we found out 2 warning signs for QL Resources Berhad which you should know before investing here.
Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that to do have these characteristics. You can access a free list of them here.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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