If EPS Growth Is Important To You, Chongqing Mas Sci.&Tech.Co.Ltd (SZSE:300275) 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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Chongqing Mas Sci.&Tech.Co.Ltd (SZSE:300275), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

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How Fast Is Chongqing Mas Sci.&Tech.Co.Ltd Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Chongqing Mas Sci.&Tech.Co.Ltd has grown EPS by 24% per year, compound, in the last three years. As a result, we can understand why the stock trades on a high multiple of trailing twelve month earnings.

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 Chongqing Mas Sci.&Tech.Co.Ltd is growing revenues, and EBIT margins improved by 4.2 percentage points to 14%, over the last year. Both of which are great metrics to check off for potential growth.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

View our latest analysis for Chongqing Mas Sci.&Tech.Co.Ltd

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 Chongqing Mas Sci.&Tech.Co.Ltd's balance sheet strength, before getting too excited.

Are Chongqing Mas Sci.&Tech.Co.Ltd 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 Chongqing Mas Sci.&Tech.Co.Ltd insiders have a significant amount of capital invested in the stock. We note that their impressive stake in the company is worth CN¥984m. This totals to 22% of shares in the company. Enough to lead management's decision making process down a path that brings the most benefit to shareholders. Very encouraging.

Does Chongqing Mas Sci.&Tech.Co.Ltd Deserve A Spot On Your Watchlist?

For growth investors, Chongqing Mas Sci.&Tech.Co.Ltd's raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Chongqing Mas Sci.&Tech.Co.Ltd's continuing strength. 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. Before you take the next step you should know about the 1 warning sign for Chongqing Mas Sci.&Tech.Co.Ltd that we have uncovered.

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.