Here's Why We Think eCargo Holdings (ASX:ECG) Is Well Worth Watching

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in eCargo Holdings (ASX:ECG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide eCargo Holdings with the means to add long-term value to shareholders.

Check out our latest analysis for eCargo Holdings

How Fast Is eCargo Holdings Growing Its Earnings Per Share?

Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It is awe-striking that eCargo Holdings' EPS went from HK$0.0029 to HK$0.0091 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. This could point to the business hitting a point of inflection.

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. EBIT margins for eCargo Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 74% to HK$146m. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since eCargo Holdings is no giant, with a market capitalisation of AU$26m, you should definitely check its cash and debt before getting too excited about its prospects.

Are eCargo Holdings Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

In the last twelve months eCargo Holdings insiders spent HK$7.9k on stock; good news for shareholders. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling. Zooming in, we can see that the biggest insider purchase was by Independent Non-Executive Director Yuming Zou for AU$4.9k worth of shares, at about AU$0.033 per share.

Should You Add eCargo Holdings To Your Watchlist?

eCargo Holdings' earnings per share have been soaring, with growth rates sky high. Growth-minded people will be intrigued by the incredible movement in EPS growth. And in fact, it could well signal a fundamental shift in the business economics. If this is the case, then keeping a watch over eCargo Holdings could be in your best interest. What about risks? Every company has them, and we've spotted 5 warning signs for eCargo Holdings (of which 4 are a bit unpleasant!) you should know about.

The good news is that eCargo Holdings is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

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.