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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Jardine Cycle & Carriage (SGX:C07). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jardine Cycle & Carriage with the means to add long-term value to shareholders.

Jardine Cycle & Carriage's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that Jardine Cycle & Carriage's EPS has grown 31% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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. It's noted that Jardine Cycle & Carriage's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Jardine Cycle & Carriage achieved similar EBIT margins to last year, revenue grew by a solid 3.1% to US$22b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Jardine Cycle & Carriage's future profits.

Are Jardine Cycle & Carriage Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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.

The good news is that Jardine Cycle & Carriage insiders spent a whopping US$1.2m on stock in just one year, without so much as a single sale. Buying like that is a fantastic look for the company and should rouse the market in anticipation for the future. Zooming in, we can see that the biggest insider purchase was by Group MD & Director Benjamin Birks for S$644k worth of shares, at about S$33.90 per share.

The good news, alongside the insider buying, for Jardine Cycle & Carriage bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold US$33m worth of its stock. This considerable investment should help drive long-term value in the business. Even though that's only about 0.3% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Ben Birks, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Jardine Cycle & Carriage with market caps between US$4.0b and US$12b is about US$3.6m.

Jardine Cycle & Carriage offered total compensation worth US$3.2m to its CEO in the year to December 2023. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Does Jardine Cycle & Carriage Deserve A Spot On Your Watchlist?

For growth investors, Jardine Cycle & Carriage's raw rate of earnings growth is a beacon in the night. Furthermore, company insiders have been adding to their significant stake in the company. Astute investors will want to keep this stock on watch. Still, you should learn about the 2 warning signs we've spotted with Jardine Cycle & Carriage (including 1 which is concerning).

The good news is that Jardine Cycle & Carriage is not the only stock with insider buying. Here's a list of small cap, undervalued companies in SG 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com