Do Inaba Denki SangyoLtd's (TSE:9934) Earnings Warrant Your Attention?

Simply Wall St · 04/15 04:33

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. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Inaba Denki SangyoLtd (TSE:9934). 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.

Our free stock report includes 1 warning sign investors should be aware of before investing in Inaba Denki SangyoLtd. Read for free now.

How Fast Is Inaba Denki SangyoLtd Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. Inaba Denki SangyoLtd managed to grow EPS by 12% per year, over three years. That's a good rate of growth, if it can be sustained.

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. While we note Inaba Denki SangyoLtd achieved similar EBIT margins to last year, revenue grew by a solid 10% to JP¥375b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

earnings-and-revenue-history
TSE:9934 Earnings and Revenue History April 15th 2025

See our latest analysis for Inaba Denki SangyoLtd

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 Inaba Denki SangyoLtd's balance sheet strength, before getting too excited.

Are Inaba Denki SangyoLtd Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Inaba Denki SangyoLtd shares worth a considerable sum. As a matter of fact, their holding is valued at JP¥3.9b. That's a lot of money, and no small incentive to work hard. Despite being just 1.9% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add Inaba Denki SangyoLtd To Your Watchlist?

One important encouraging feature of Inaba Denki SangyoLtd is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. These two factors are a huge highlight for the company which should be a strong contender your watchlists. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Inaba Denki SangyoLtd that you should be aware of.

Although Inaba Denki SangyoLtd 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 Japanese 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.