We Ran A Stock Scan For Earnings Growth And Jianmin Pharmaceutical GroupLtd (SHSE:600976) Passed With Ease

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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Jianmin Pharmaceutical GroupLtd (SHSE:600976). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jianmin Pharmaceutical GroupLtd with the means to add long-term value to shareholders.

See our latest analysis for Jianmin Pharmaceutical GroupLtd

Jianmin Pharmaceutical GroupLtd's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Recognition must be given to the that Jianmin Pharmaceutical GroupLtd has grown EPS by 38% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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 Jianmin Pharmaceutical GroupLtd achieved similar EBIT margins to last year, revenue grew by a solid 12% to CN¥4.2b. That's a real positive.

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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Jianmin Pharmaceutical GroupLtd.

Are Jianmin Pharmaceutical GroupLtd Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Jianmin Pharmaceutical GroupLtd insiders have a significant amount of capital invested in the stock. To be specific, they have CN¥88m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that's only about 0.9% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

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 Jianmin Pharmaceutical GroupLtd, with market caps between CN¥7.2b and CN¥23b, is around CN¥1.2m.

Jianmin Pharmaceutical GroupLtd offered total compensation worth CN¥873k to its CEO in the year to December 2022. 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 a culture of integrity, in a broader sense.

Does Jianmin Pharmaceutical GroupLtd Deserve A Spot On Your Watchlist?

Jianmin Pharmaceutical GroupLtd's earnings per share growth have been climbing higher at an appreciable rate. An added bonus for those interested is that management hold a heap of stock and the CEO pay is quite reasonable, illustrating good cash management. The drastic earnings growth indicates the business is going from strength to strength. Hopefully a trend that continues well into the future. Big growth can make big winners, so the writing on the wall tells us that Jianmin Pharmaceutical GroupLtd is worth considering carefully. Before you take the next step you should know about the 2 warning signs for Jianmin Pharmaceutical GroupLtd (1 makes us a bit uncomfortable!) that we have uncovered.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CN with promising growth potential and insider confidence.

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.