Here’s why United Overseas Bank (SGX U11) has caught the eye of investors
Investors are often attracted by the possibility of investing in a company that will turn its fortunes around. This is why even companies with no revenue or profit and a track record of failure can find investors. These high-risk investments are often not likely to pay off and many investors have to pay the price for learning their lesson. Loss-making companies are yet to show their profit potential and external capital may eventually dry up.
If this idea of high-risk and high rewards doesn’t appeal to you, then maybe profitable, growing businesses might be more appealing to you. United Overseas Bank (SGX:U11). This doesn’t necessarily indicate that it is undervalued. However, the business’ profitability should be enough to justify some appreciation – particularly if it’s growing.
See our latest analysis for United Overseas Bank
United Overseas Bank: Improving Profits
A company that has a steady increase in earnings per share (EPS), year after year, will be able to grow its business even at very low growth rates. An investor can be encouraged to buy stock if EPS increases are encouraging. United Overseas Bank increased its trailing twelve-month EPS by S$2.17 from S$2.61 in the past year. This is a 20% increase; a respectable growth in the larger scheme of things.
A company’s top-line growth is a good indicator of sustainable growth. It is combined with an impressive earnings before interest taxation (EBIT), margin is a great way to stay competitive in the market. It has been noted that United Overseas Bank is the largest bank in terms of revenue. Operation The EBIT margin of United Overseas Bank was lower than its revenue over the previous twelve months. This could impact our analysis on its margins. We note that United Overseas Bank had similar EBIT margins last year, but revenue grew solidly by 17% to S$10b. This is a great positive.
Below is the chart showing how the company’s top- and bottom lines have developed over time. Click on the chart to see the actual numbers.
Investors need to look for companies that are financially sound. Going to You will be able to perform well in future, and not only in the present. You can still check your ability to predict the future. our visualization of consensus analyst forecasts for United Overseas Bank’s future EPS 100% free.
Are United Overseas Bank Insiders Aligned with All Shareholders
It is said that smoke cannot be made without fire. Insider buying can often be a sign that stocks are in danger of being set ablaze by investors. Because buying stock often indicates that the buyer believes it to be undervalued. Small purchases may not always be a sign of conviction. And insiders might not always get it right.
It’s not surprising to see that insiders spent S$3.3m purchasing shares of United Overseas Bank over the last 12 months without reporting any share sale. It is a wonderful look for the company. This should encourage the market to be optimistic about the future. We also note that it was the Deputy Chairman & CEO, Ee Cheong Wee, who made the biggest single acquisition, paying S$1.3m for shares at about S$26.95 each.
It’s encouraging to see that insiders of United Overseas Bank have made a significant investment in the company, on top of the insider purchasing. Their stake in the company is worth S$7.8b, which is quite an impressive amount. Insiders have a 16% stake in the company, giving them a lot more power and potential to generate shareholder value. Investors can be very optimistic.
Do You Need to Add United Overseas Bank to Your Watchlist?
United Overseas Bank’s growing profits is a positive sign. We’ve also seen insiders purchasing shares Even though they already have plenty. The company is a great candidate to add to your watchlist, and it should be a top priority for research. Still, it is important to be mindful of the risks. United Overseas Bank for instance. 1 warning sign These are the things we believe you should know.
Insider buying is a favorite of keen growth investors. United Overseas Bank may not be the only one. You can find a a free list of them here.
Note that insider transactions are only reported transactions in the applicable jurisdiction.
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This article is general in nature by Simply Wall St. Our commentary is based on historical data, analyst forecasts and other unbiased information. We do not intend to provide financial advice. This analysis does not represent a recommendation to purchase or sell any stock and it does not consider your financial goals or financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Our analysis may not take into account the most recent price-sensitive company announcements and qualitative material. Simply Wall St does not hold any position in the stocks mentioned.
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