Does New Trend International Logis-TechLtd (SZSE:300532) Deserve A Spot On Your Watchlist?

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in New Trend International Logis-TechLtd (SZSE:300532). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide New Trend International Logis-TechLtd with the means to add long-term value to shareholders.

View our latest analysis for New Trend International Logis-TechLtd

How Fast Is New Trend International Logis-TechLtd Growing Its Earnings Per Share?

Over the last three years, New Trend International Logis-TechLtd has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, New Trend International Logis-TechLtd's EPS grew from CN¥0.73 to CN¥1.28, over the previous 12 months. It's not often a company can achieve year-on-year growth of 75%. The best case scenario? That the business has hit a true inflection point.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. New Trend International Logis-TechLtd shareholders can take confidence from the fact that EBIT margins are up from 11% to 13%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check New Trend International Logis-TechLtd's balance sheet strength, before getting too excited.

Are New Trend International Logis-TechLtd 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 those who are interested in New Trend International Logis-TechLtd will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 42% of the shares, making insiders a very influential shareholder group. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. CN¥1.9b That level of investment from insiders is nothing to sneeze at.

Should You Add New Trend International Logis-TechLtd To Your Watchlist?

New Trend International Logis-TechLtd's earnings per share have been soaring, with growth rates sky high. 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. So based on this quick analysis, we do think it's worth considering New Trend International Logis-TechLtd for a spot on your watchlist. We should say that we've discovered 1 warning sign for New Trend International Logis-TechLtd that you should be aware of before investing here.

Although New Trend International Logis-TechLtd certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Chinese companies that not only boast of strong growth but have also seen recent insider buying..

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.