Here's Why We Think Xingye Leather Technology (SZSE:002674) Might Deserve Your Attention Today

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 Xingye Leather Technology (SZSE:002674). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Xingye Leather Technology with the means to add long-term value to shareholders.

Check out our latest analysis for Xingye Leather Technology

How Fast Is Xingye Leather Technology 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. Xingye Leather Technology's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 41%. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that Xingye Leather Technology is growing revenues, and EBIT margins improved by 3.1 percentage points to 12%, 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. To see the actual numbers, click on the chart.

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

Are Xingye Leather Technology 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. So it is good to see that Xingye Leather Technology insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at CN¥530m, they have plenty of motivation to push the business to succeed. That holding amounts to 15% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.

Does Xingye Leather Technology Deserve A Spot On Your Watchlist?

Xingye Leather Technology's earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. 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 Xingye Leather Technology very closely. What about risks? Every company has them, and we've spotted 2 warning signs for Xingye Leather Technology (of which 1 is potentially serious!) you should know about.

Although Xingye Leather Technology 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.