Should You Be Adding Shandong Yisheng Livestock & Poultry Breeding (SZSE:002458) To Your Watchlist Today?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Shandong Yisheng Livestock & Poultry Breeding (SZSE:002458). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Shandong Yisheng Livestock & Poultry Breeding

Shandong Yisheng Livestock & Poultry Breeding's Improving Profits

Shandong Yisheng Livestock & Poultry Breeding has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Shandong Yisheng Livestock & Poultry Breeding's EPS skyrocketed from CN¥0.24 to CN¥0.30, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 28%.

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. While we note Shandong Yisheng Livestock & Poultry Breeding achieved similar EBIT margins to last year, revenue grew by a solid 11% to CN¥3.0b. That's encouraging news 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 we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Shandong Yisheng Livestock & Poultry Breeding?

Are Shandong Yisheng Livestock & Poultry Breeding Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So as you can imagine, the fact that Shandong Yisheng Livestock & Poultry Breeding insiders own a significant number of shares certainly is appealing. Owning 49% of the company, insiders have plenty riding on the performance of the the share price. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. CN¥5.5b This is an incredible endorsement from them.

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. For companies with market capitalisations between CN¥7.2b and CN¥23b, like Shandong Yisheng Livestock & Poultry Breeding, the median CEO pay is around CN¥1.2m.

Shandong Yisheng Livestock & Poultry Breeding's CEO took home a total compensation package worth CN¥1.0m in the year leading up to December 2023. That is actually below the median for CEO's of similarly sized companies. 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 good governance, more generally.

Should You Add Shandong Yisheng Livestock & Poultry Breeding To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Shandong Yisheng Livestock & Poultry Breeding's strong EPS growth. If you still have your doubts, remember too that company insiders have a considerable investment aligning themselves with the shareholders and CEO pay is quite modest compared to similarly sized companiess. This may only be a fast rundown, but the key takeaway is that Shandong Yisheng Livestock & Poultry Breeding is worth keeping an eye on. We don't want to rain on the parade too much, but we did also find 2 warning signs for Shandong Yisheng Livestock & Poultry Breeding that you need to be mindful 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.