Yahoo Finance Does Invicta Holdings (JSE:IVT) 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Invicta Holdings (JSE:IVT). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Invicta Holdings with the means to add long-term value to shareholders.
See our latest analysis for Invicta Holdings
How Fast Is Invicta Holdings Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Invicta Holdings' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 40%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Invicta Holdings maintained stable EBIT margins over the last year, all while growing revenue 6.6% to R8.3b. That's a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
Since Invicta Holdings is no giant, with a market capitalisation of R2.7b, you should definitely check its cash and debt before getting too excited about its prospects.
Are Invicta 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
First things first, there weren't any reports of insiders selling shares in Invicta Holdings in the last 12 months. Even better, though, is that the Non-Executive Chairman, Christoffel F. Wiese, bought a whopping R7.0m worth of shares, paying about R26.63 per share, on average. Purchases like this can offer an insight into the faith of the company's management - and it seems to be all positive.
And the insider buying isn't the only sign of alignment between shareholders and the board, since Invicta Holdings insiders own more than a third of the company. To be exact, company insiders hold 57% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. To give you an idea, the value of insiders' holdings in the business are valued at R1.5b at the current share price. That should be more than enough to keep them focussed on creating shareholder value!
Should You Add Invicta Holdings To Your Watchlist?
Invicta Holdings' earnings have taken off in quite an impressive fashion. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Invicta Holdings deserves timely attention. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Invicta Holdings that you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Invicta Holdings, you'll probably love this curated collection of companies in ZA 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
