Here's Why We Think Tye Soon (SGX:BFU) Might Deserve Your Attention Today

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 Tye Soon (SGX:BFU), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Tye Soon

How Fast Is Tye Soon Growing Its Earnings Per Share?

In the last three years Tye Soon's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. Tye Soon has grown its trailing twelve month EPS from S$0.061 to S$0.065, in the last year. That amounts to a small improvement of 7.2%.

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. Tye Soon maintained stable EBIT margins over the last year, all while growing revenue 6.3% to S$251m. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Tye Soon isn't a huge company, given its market capitalisation of S$31m. That makes it extra important to check on its balance sheet strength.

Are Tye Soon 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.

With strong conviction, Tye Soon insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the MD & Executive Director, Tek Yew Chong, paid S$69k to buy shares at an average price of S$0.40. Strong buying like that could be a sign of opportunity.

Does Tye Soon Deserve A Spot On Your Watchlist?

One important encouraging feature of Tye Soon is that it is growing profits. It's not easy for business to grow EPS, but Tye Soon has shown the strengths to do just that. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. What about risks? Every company has them, and we've spotted 4 warning signs for Tye Soon (of which 2 shouldn't be ignored!) you should know about.

The good news is that Tye Soon is not the only growth stock with insider buying. Here's a list of them... 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.

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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.