Here's Why We Think Silvery Dragon Prestressed MaterialsLTD Tianjin (SHSE:603969) 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.

In contrast to all that, many investors prefer to focus on companies like Silvery Dragon Prestressed MaterialsLTD Tianjin (SHSE:603969), 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 Silvery Dragon Prestressed MaterialsLTD Tianjin with the means to add long-term value to shareholders.

View our latest analysis for Silvery Dragon Prestressed MaterialsLTD Tianjin

How Quickly Is Silvery Dragon Prestressed MaterialsLTD Tianjin Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years Silvery Dragon Prestressed MaterialsLTD Tianjin grew its EPS by 9.5% per year. That's a pretty good rate, if the company can sustain it.

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. The good news is that Silvery Dragon Prestressed MaterialsLTD Tianjin is growing revenues, and EBIT margins improved by 4.0 percentage points to 9.8%, 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. Click on the chart to see the exact numbers.

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

Are Silvery Dragon Prestressed MaterialsLTD Tianjin 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 we're pleased to report that Silvery Dragon Prestressed MaterialsLTD Tianjin insiders own a meaningful share of the business. Actually, with 40% of the company to their names, insiders are profoundly invested in the business. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. At the current share price, that insider holding is worth a staggering CN¥2.1b. That level of investment from insiders is nothing to sneeze at.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. 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 Silvery Dragon Prestressed MaterialsLTD Tianjin with market caps between CN¥2.9b and CN¥12b is about CN¥971k.

The CEO of Silvery Dragon Prestressed MaterialsLTD Tianjin was paid just CN¥343k in total compensation for the year ending December 2023. You could consider this pay as somewhat symbolic, which suggests the CEO does not need a lot of compensation to stay motivated. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Silvery Dragon Prestressed MaterialsLTD Tianjin To Your Watchlist?

One important encouraging feature of Silvery Dragon Prestressed MaterialsLTD Tianjin is that it is growing profits. The fact that EPS is growing is a genuine positive for Silvery Dragon Prestressed MaterialsLTD Tianjin, but the pleasant picture gets better than that. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. We don't want to rain on the parade too much, but we did also find 1 warning sign for Silvery Dragon Prestressed MaterialsLTD Tianjin 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.