Stock Analysis

Should You Be Adding Sichuan Kexin Mechanical and Electrical EquipmentLtd (SZSE:300092) To Your Watchlist Today?

SZSE:300092
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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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. 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.

In contrast to all that, many investors prefer to focus on companies like Sichuan Kexin Mechanical and Electrical EquipmentLtd (SZSE:300092), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Sichuan Kexin Mechanical and Electrical EquipmentLtd with the means to add long-term value to shareholders.

Check out our latest analysis for Sichuan Kexin Mechanical and Electrical EquipmentLtd

Sichuan Kexin Mechanical and Electrical EquipmentLtd'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. It certainly is nice to see that Sichuan Kexin Mechanical and Electrical EquipmentLtd has managed to grow EPS by 22% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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. The good news is that Sichuan Kexin Mechanical and Electrical EquipmentLtd is growing revenues, and EBIT margins improved by 3.8 percentage points to 14%, over the last year. 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.

earnings-and-revenue-history
SZSE:300092 Earnings and Revenue History February 27th 2024

Fortunately, we've got access to analyst forecasts of Sichuan Kexin Mechanical and Electrical EquipmentLtd's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Sichuan Kexin Mechanical and Electrical EquipmentLtd Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that Sichuan Kexin Mechanical and Electrical EquipmentLtd insiders own a significant number of shares certainly is appealing. Actually, with 42% of the company to their names, insiders are profoundly invested in the business. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. With that sort of holding, insiders have about CN¥1.4b riding on the stock, at current prices. That's nothing to sneeze at!

Is Sichuan Kexin Mechanical and Electrical EquipmentLtd Worth Keeping An Eye On?

You can't deny that Sichuan Kexin Mechanical and Electrical EquipmentLtd has grown its earnings per share at a very impressive rate. That's attractive. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. What about risks? Every company has them, and we've spotted 3 warning signs for Sichuan Kexin Mechanical and Electrical EquipmentLtd (of which 1 is potentially serious!) you should know about.

Although Sichuan Kexin Mechanical and Electrical EquipmentLtd 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.

Valuation is complex, but we're helping make it simple.

Find out whether Sichuan Kexin Mechanical and Electrical EquipmentLtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.