Nasdaq
華爾街日報United Plantations Berhad (KLSE:UTDPLT) Ticks All The Boxes When It Comes To Earnings Growth
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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like United Plantations Berhad (KLSE:UTDPLT), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide United Plantations Berhad with the means to add long-term value to shareholders.
How Quickly Is United Plantations Berhad Increasing Earnings Per Share?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, United Plantations Berhad has grown EPS by 10% per year. That growth rate is fairly good, assuming the company can keep it up.
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. It's noted that, last year, United Plantations Berhad's revenue from operations was lower than its revenue, so that could distort our analysis of its margins. While we note United Plantations Berhad achieved similar EBIT margins to last year, revenue grew by a solid 14% to RM2.5b. That's progress.
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.
See our latest analysis for United Plantations Berhad
While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check United Plantations Berhad's balance sheet strength, before getting too excited.
Are United Plantations Berhad 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. Shareholders will be pleased by the fact that insiders own United Plantations Berhad shares worth a considerable sum. Indeed, they have a considerable amount of wealth invested in it, currently valued at RM744m. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.
While it's always good to see some strong conviction in the company from insiders through heavy investment, it's also important for shareholders to ask if management compensation policies are reasonable. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between RM16b and RM49b, like United Plantations Berhad, the median CEO pay is around RM7.0m.
The United Plantations Berhad CEO received total compensation of just RM2.8m in the year to December 2024. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Should You Add United Plantations Berhad To Your Watchlist?
As previously touched on, United Plantations Berhad is a growing business, which is encouraging. The growth of EPS may be the eye-catching headline for United Plantations Berhad, but there's more to bring joy for shareholders. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. However, before you get too excited we've discovered 1 warning sign for United Plantations Berhad that you should be aware of.
Although United Plantations 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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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.