July 20, 2024
Investment

Does Ladun Investment (TADAWUL:9535) 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. 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.

In contrast to all that, many investors prefer to focus on companies like Ladun Investment (TADAWUL:9535), which has not only revenues, but also profits. While this doesn’t necessarily speak to whether it’s undervalued, the profitability of the business is enough to warrant some appreciation – especially if its growing.

View our latest analysis for Ladun Investment

How Fast Is Ladun Investment Growing Its Earnings Per Share?

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it’s no surprise that some investors are more inclined to invest in profitable businesses. Outstandingly, Ladun Investment’s EPS shot from ر.س0.075 to ر.س0.21, over the last year. Year on year growth of 177% is certainly a sight to behold.

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. Ladun Investment shareholders can take confidence from the fact that EBIT margins are up from 8.0% to 11%, and revenue is growing. Both of which are great metrics to check off for potential growth.

The chart below shows how the company’s bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

SASE:9535 Earnings and Revenue History December 31st 2023

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Ladun Investment Insiders Aligned With All Shareholders?

It’s a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Ladun Investment followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. With a whopping ر.س200m worth of shares as a group, insiders have plenty riding on the company’s success. That’s certainly enough to let shareholders know that management will be very focussed on long term growth.

Should You Add Ladun Investment To Your Watchlist?

Ladun Investment’s earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there’s a potential opportunity to be had here. Based on the sum of its parts, we definitely think its worth watching Ladun Investment very closely. Still, you should learn about the 2 warning signs we’ve spotted with Ladun Investment (including 1 which is a bit unpleasant).

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 tailored list of Saudi companies which have demonstrated growth backed by recent insider purchases.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we’re helping make it simple.

Find out whether Ladun Investment is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.



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