With EPS Growth And More, Guangzhou Goaland Energy Conservation Tech (SZSE:300499) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Guangzhou Goaland Energy Conservation Tech (SZSE:300499). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Guangzhou Goaland Energy Conservation Tech with the means to add long-term value to shareholders.

See our latest analysis for Guangzhou Goaland Energy Conservation Tech

Guangzhou Goaland Energy Conservation Tech's Improving Profits

Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It is awe-striking that Guangzhou Goaland Energy Conservation Tech's EPS went from CN¥0.16 to CN¥0.92 in just one year. Even though that growth rate may not be repeated, that looks like a breakout improvement.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Unfortunately, revenue is down and so are margins. This is less than stellar for the company.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

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

Are Guangzhou Goaland Energy Conservation Tech Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Guangzhou Goaland Energy Conservation Tech shares worth a considerable sum. With a whopping CN¥616m worth of shares as a group, insiders have plenty riding on the company's success. Amounting to 16% of the outstanding shares, indicating that insiders are also significantly impacted by the decisions they make on the behalf of the business.

Is Guangzhou Goaland Energy Conservation Tech Worth Keeping An Eye On?

Guangzhou Goaland Energy Conservation Tech's earnings per share growth have been climbing higher at an appreciable rate. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Guangzhou Goaland Energy Conservation Tech very closely. Even so, be aware that Guangzhou Goaland Energy Conservation Tech is showing 4 warning signs in our investment analysis , and 2 of those are significant...

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.