This Growth Stock’s Earnings Are Up 322% In 10 Years: 2 Things Investors Should Know

The retail industry is home to some of the US stock market’s best growth stocks over the past few decades. In Singapore, there are also companies in the retail business that have delivered solid earnings growth through the years and one such company is Hour Glass Ltd (SGX: AGS).

The Hour Glass is a luxury watch retailer with more than 40 stores in the Asia Pacific region. It is an official retailer of some of the world’s finest watch brands such as Audemars Piguet, Patek Philippe, Rolex, and more.

As I mentioned, Hour Glass has a solid track record of growing its business. Here’s a quick glance at the company’s revenue and earnings growth over its last 10 fiscal years:

Hour Glass revenue, profit, and earnings per share table
Source: S&P Global Market Intelligence

You can see that Hour Glass’s revenue had doubled from fiscal 2006 to fiscal 2016, giving rise to a compound annual growth rate of 7.2%. The company’s earnings have climbed at a much faster annual pace of 15.5%, which works out to a 322% increase in total.

That said, Hour Glass’s earnings growth has slowed in recent years as seen in how its profit had climbed at just 4.3% per year from fiscal 2011 to fiscal 2016.

It’s worth mentioning too that Hour Glass is still majority-owned by its co-founders Dr Henry Tay and Dato’ Dr Jannie Chan. Together, they control 62.4% of Hour Glass’s shares as of 8 June 2015. This included shares of Hour Glass that are held by Tay and Chan personally as well as by their investment vehicles.

Tay and Chan, along with some of their family members, are also acting in leadership roles in Hour Glass. For instance, their son, Michael Tay, is the group managing director. The elder Tay is himself executive chairman of Hour Glass.

So as you can tell, Hour Glass can be considered to be a company that’s owner-managed. There thus seem to be at least some alignment of interests between minority shareholders of Hour Glass and the company’s senior management team.

Alignment of interest is a squishy topic with no clear-cut answers. But, there’s one thing which is clear: Hour Glass’s shares have been rewarding for investors over the past five years. Since 30 June 2011, the price of Hour Glass’s shares has jumped by 92% in all.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.