If EPS Growth Is Important To You, Sunshine Guojian Pharmaceutical (Shanghai) (SHSE:688336) Presents An Opportunity

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. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Sunshine Guojian Pharmaceutical (Shanghai) (SHSE:688336), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

View our latest analysis for Sunshine Guojian Pharmaceutical (Shanghai)

How Fast Is Sunshine Guojian Pharmaceutical (Shanghai) Growing Its Earnings Per Share?

In the last three years Sunshine Guojian Pharmaceutical (Shanghai)'s earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Sunshine Guojian Pharmaceutical (Shanghai)'s EPS grew from CN¥0.35 to CN¥0.59, over the previous 12 months. It's a rarity to see 69% year-on-year growth like that.

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. Sunshine Guojian Pharmaceutical (Shanghai) shareholders can take confidence from the fact that EBIT margins are up from 16% to 20%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Sunshine Guojian Pharmaceutical (Shanghai)'s forecast profits?

Are Sunshine Guojian Pharmaceutical (Shanghai) Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own Sunshine Guojian Pharmaceutical (Shanghai) shares worth a considerable sum. With a whopping CN¥562m worth of shares as a group, insiders have plenty riding on the company's success. This would indicate that the goals of shareholders and management are one and the same.

Is Sunshine Guojian Pharmaceutical (Shanghai) Worth Keeping An Eye On?

Sunshine Guojian Pharmaceutical (Shanghai)'s earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. Based on the sum of its parts, we definitely think its worth watching Sunshine Guojian Pharmaceutical (Shanghai) very closely. However, before you get too excited we've discovered 2 warning signs for Sunshine Guojian Pharmaceutical (Shanghai) (1 makes us a bit uncomfortable!) that you should be aware of.

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.