Is Now The Time To Put OCB Berhad (KLSE:OCB) 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 OCB Berhad (KLSE:OCB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide OCB Berhad with the means to add long-term value to shareholders.

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How Fast Is OCB Berhad Growing Its Earnings Per Share?

OCB Berhad has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. OCB Berhad boosted its trailing twelve month EPS from RM0.12 to RM0.13, in the last year. There's little doubt shareholders would be happy with that 16% gain.

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. Unfortunately, revenue is down and so are margins. This is less than stellar for the company.

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.

Check out our latest analysis for OCB Berhad

Since OCB Berhad is no giant, with a market capitalisation of RM83m, you should definitely check its cash and debt before getting too excited about its prospects.

Are OCB Berhad Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So as you can imagine, the fact that OCB Berhad insiders own a significant number of shares certainly is appealing. In fact, they own 35% of the shares, making insiders a very influential shareholder group. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. Although, with OCB Berhad being valued at RM83m, this is a small company we're talking about. That means insiders only have RM29m worth of shares, despite the large proportional holding. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Should You Add OCB Berhad To Your Watchlist?

One important encouraging feature of OCB Berhad is that it is growing profits. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. It is worth noting though that we have found 2 warning signs for OCB Berhad that you need to take into consideration.

Although OCB Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Malaysian companies that not only boast of strong growth but have strong insider backing.

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

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