Here's Why We Think Singapore Airlines (SGX:C6L) Is Well Worth Watching

In This Article:

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

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Singapore Airlines (SGX:C6L). 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.

Check out our latest analysis for Singapore Airlines

How Fast Is Singapore Airlines Growing Its Earnings Per Share?

Over the last three years, Singapore Airlines has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Singapore Airlines' EPS grew from S$0.36 to S$0.75, over the previous 12 months. It's a rarity to see 111% year-on-year growth like that.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Singapore Airlines remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.0% to S$19b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

earnings-and-revenue-history
earnings-and-revenue-history

Fortunately, we've got access to analyst forecasts of Singapore Airlines' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Singapore Airlines Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a S$24b company like Singapore Airlines. But we are reassured by the fact they have invested in the company. As a matter of fact, their holding is valued at S$54m. That's a lot of money, and no small incentive to work hard. While their ownership only accounts for 0.2%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.