If EPS Growth Is Important To You, Nanjing Inform Storage Equipment (Group) (SHSE:603066) Presents An Opportunity

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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Nanjing Inform Storage Equipment (Group) (SHSE:603066). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Nanjing Inform Storage Equipment (Group) with the means to add long-term value to shareholders.

Nanjing Inform Storage Equipment (Group)'s Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Nanjing Inform Storage Equipment (Group) managed to grow EPS by 15% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

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. We note that while EBIT margins have improved from 7.2% to 11%, the company has actually reported a fall in revenue by 16%. That falls short of ideal.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Check out our latest analysis for Nanjing Inform Storage Equipment (Group)

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Nanjing Inform Storage Equipment (Group)'s balance sheet strength, before getting too excited.

Are Nanjing Inform Storage Equipment (Group) 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. Nanjing Inform Storage Equipment (Group) followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. To be specific, they have CN¥343m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 10% of the company; visible skin in the game.

Does Nanjing Inform Storage Equipment (Group) Deserve A Spot On Your Watchlist?

One important encouraging feature of Nanjing Inform Storage Equipment (Group) is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. These two factors are a huge highlight for the company which should be a strong contender your watchlists. However, before you get too excited we've discovered 1 warning sign for Nanjing Inform Storage Equipment (Group) that you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CN with promising growth potential and insider confidence.

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.