Is Now The Time To Put Aier Eye Hospital Group (SZSE:300015) On Your Watchlist?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Aier Eye Hospital Group (SZSE:300015). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Aier Eye Hospital Group with the means to add long-term value to shareholders.

View our latest analysis for Aier Eye Hospital Group

How Fast Is Aier Eye Hospital Group Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Impressively, Aier Eye Hospital Group has grown EPS by 18% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.

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. While we note Aier Eye Hospital Group achieved similar EBIT margins to last year, revenue grew by a solid 13% to CN¥21b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Aier Eye Hospital Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Aier Eye Hospital Group Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a CN¥177b company like Aier Eye Hospital Group. But we do take comfort from the fact that they are investors in the company. We note that their impressive stake in the company is worth CN¥36b. That equates to 20% of the company, making insiders powerful and aligned with other shareholders. So there is opportunity here to invest in a company whose management have tangible incentives to deliver.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. The median total compensation for CEOs of companies similar in size to Aier Eye Hospital Group, with market caps over CN¥56b, is around CN¥2.8m.

The CEO of Aier Eye Hospital Group only received CN¥1.2m in total compensation for the year ending December 2023. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does Aier Eye Hospital Group Deserve A Spot On Your Watchlist?

For growth investors, Aier Eye Hospital Group's raw rate of earnings growth is a beacon in the night. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. This may only be a fast rundown, but the key takeaway is that Aier Eye Hospital Group 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 Aier Eye Hospital Group (1 is a bit concerning!) 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.