Should You Be Adding Jiangsu Luokai Mechanical &Electrical (SHSE:603829) To Your Watchlist Today?

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. 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.

In contrast to all that, many investors prefer to focus on companies like Jiangsu Luokai Mechanical &Electrical (SHSE:603829), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Jiangsu Luokai Mechanical &Electrical

How Fast Is Jiangsu Luokai Mechanical &Electrical Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. We can see that in the last three years Jiangsu Luokai Mechanical &Electrical grew its EPS by 16% per year. That's a pretty good rate, if the company can sustain it.

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. Jiangsu Luokai Mechanical &Electrical maintained stable EBIT margins over the last year, all while growing revenue 18% to CN¥1.9b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Jiangsu Luokai Mechanical &Electrical isn't a huge company, given its market capitalisation of CN¥2.0b. That makes it extra important to check on its balance sheet strength.

Are Jiangsu Luokai Mechanical &Electrical Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. Our analysis has discovered that the median total compensation for the CEOs of companies like Jiangsu Luokai Mechanical &Electrical with market caps between CN¥724m and CN¥2.9b is about CN¥767k.

The Jiangsu Luokai Mechanical &Electrical CEO received CN¥646k in compensation for the year ending December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Jiangsu Luokai Mechanical &Electrical To Your Watchlist?

One important encouraging feature of Jiangsu Luokai Mechanical &Electrical is that it is growing profits. To add to this, the modest CEO compensation should tell investors that the directors have an active interest in delivering the best for shareholders. All things considered, Jiangsu Luokai Mechanical &Electrical is definitely worth taking a deeper dive into. Even so, be aware that Jiangsu Luokai Mechanical &Electrical is showing 1 warning sign in our investment analysis , you should know about...

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 recent insider purchases.

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.