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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like K-One Technology Berhad (KLSE:K1), 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 K-One Technology Berhad with the means to add long-term value to shareholders.

View our latest analysis for K-One Technology Berhad

K-One Technology Berhad's Improving Profits

In the last three years K-One Technology Berhad's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Impressively, K-One Technology Berhad's EPS catapulted from RM0.002 to RM0.0043, over the last year. It's not often a company can achieve year-on-year growth of 119%.

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. It seems K-One Technology Berhad is pretty stable, since revenue and EBIT margins are pretty flat year on year. While this doesn't ring alarm bells, it may not meet the expectations of growth-minded investors.

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.

Since K-One Technology Berhad is no giant, with a market capitalisation of RM137m, you should definitely check its cash and debt before getting too excited about its prospects.

Are K-One Technology Berhad Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So we're pleased to report that K-One Technology Berhad insiders own a meaningful share of the business. Actually, with 40% of the company to their names, insiders are profoundly invested in the business. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. Of course, K-One Technology Berhad is a very small company, with a market cap of only RM137m. So despite a large proportional holding, insiders only have RM54m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Should You Add K-One Technology Berhad To Your Watchlist?

K-One Technology Berhad's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering K-One Technology Berhad for a spot on your watchlist. What about risks? Every company has them, and we've spotted 3 warning signs for K-One Technology Berhad (of which 2 don't sit too well with us!) you should know about.

Although K-One Technology 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.