Does Zhejiang Zhaolong Interconnect TechnologyLtd (SZSE:300913) Deserve A Spot On Your Watchlist?

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Zhejiang Zhaolong Interconnect TechnologyLtd (SZSE:300913), 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 Zhejiang Zhaolong Interconnect TechnologyLtd with the means to add long-term value to shareholders.

See our latest analysis for Zhejiang Zhaolong Interconnect TechnologyLtd

Zhejiang Zhaolong Interconnect TechnologyLtd's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Zhejiang Zhaolong Interconnect TechnologyLtd managed to grow EPS by 10% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

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. It's noted that Zhejiang Zhaolong Interconnect TechnologyLtd's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. EBIT margins for Zhejiang Zhaolong Interconnect TechnologyLtd remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 17% to CN¥1.8b. That's a real positive.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Zhejiang Zhaolong Interconnect TechnologyLtd's forecast profits?

Are Zhejiang Zhaolong Interconnect TechnologyLtd 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 Zhejiang Zhaolong Interconnect TechnologyLtd shares worth a considerable sum. Notably, they have an enviable stake in the company, worth CN¥2.1b. This totals to 24% 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.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Our quick analysis into CEO remuneration would seem to indicate they are. Our analysis has discovered that the median total compensation for the CEOs of companies like Zhejiang Zhaolong Interconnect TechnologyLtd with market caps between CN¥7.3b and CN¥23b is about CN¥1.2m.

The CEO of Zhejiang Zhaolong Interconnect TechnologyLtd only received CN¥440k in total compensation for the year ending December 2023. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Zhejiang Zhaolong Interconnect TechnologyLtd To Your Watchlist?

As previously touched on, Zhejiang Zhaolong Interconnect TechnologyLtd is a growing business, which is encouraging. Earnings growth might be the main attraction for Zhejiang Zhaolong Interconnect TechnologyLtd, but the fun does not stop there. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Zhejiang Zhaolong Interconnect TechnologyLtd that you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Chinese companies which have demonstrated growth backed by significant insider holdings.

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.