With EPS Growth And More, Ningbo Deye Technology Group (SHSE:605117) Makes An Interesting Case

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. 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.

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 Ningbo Deye Technology Group (SHSE:605117). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Ningbo Deye Technology Group with the means to add long-term value to shareholders.

Check out our latest analysis for Ningbo Deye Technology Group

Ningbo Deye Technology Group's Improving Profits

Ningbo Deye Technology Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Ningbo Deye Technology Group's EPS grew from CN¥2.57 to CN¥5.02, over the previous 12 months. It's a rarity to see 95% year-on-year growth like that. Shareholders will be hopeful that this is a sign of the company reaching an 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 good news is that Ningbo Deye Technology Group is growing revenues, and EBIT margins improved by 7.4 percentage points to 30%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Ningbo Deye Technology Group's future EPS 100% free.

Are Ningbo Deye Technology Group Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Ningbo Deye Technology Group insiders have a significant amount of capital invested in the stock. Notably, they have an enviable stake in the company, worth CN¥8.7b. That equates to 25% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.

Is Ningbo Deye Technology Group Worth Keeping An Eye On?

Ningbo Deye Technology Group's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. 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 Ningbo Deye Technology Group very closely. We should say that we've discovered 1 warning sign for Ningbo Deye Technology Group that you should be aware of before investing here.

Although Ningbo Deye Technology Group 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.