Here's Why We Think Anhui Anfu Battery TechnologyLtd (SHSE:603031) Might Deserve Your Attention Today

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Anhui Anfu Battery TechnologyLtd (SHSE:603031). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Anhui Anfu Battery TechnologyLtd with the means to add long-term value to shareholders.

View our latest analysis for Anhui Anfu Battery TechnologyLtd

How Fast Is Anhui Anfu Battery TechnologyLtd Growing Its Earnings Per Share?

In the last three years Anhui Anfu Battery TechnologyLtd'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. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, Anhui Anfu Battery TechnologyLtd's EPS catapulted from CN¥0.40 to CN¥0.72, over the last year. Year on year growth of 82% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The music to the ears of Anhui Anfu Battery TechnologyLtd shareholders is that EBIT margins have grown from 16% to 21% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Anhui Anfu Battery TechnologyLtd Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own Anhui Anfu Battery TechnologyLtd shares worth a considerable sum. Indeed, they have a considerable amount of wealth invested in it, currently valued at CN¥1.2b. That equates to 18% of the company, making insiders powerful and aligned with other shareholders. So there is opportunity here to invest in a company whose management have tangible incentives to deliver.

Does Anhui Anfu Battery TechnologyLtd Deserve A Spot On Your Watchlist?

Anhui Anfu Battery TechnologyLtd's earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. Based on the sum of its parts, we definitely think its worth watching Anhui Anfu Battery TechnologyLtd very closely. However, before you get too excited we've discovered 2 warning signs for Anhui Anfu Battery TechnologyLtd that you should be aware of.

Although Anhui Anfu Battery TechnologyLtd certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Chinese companies that not only boast of strong growth but have also seen recent insider buying..

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.