Is Now The Time To Put Victory Giant Technology (HuiZhou)Co.Ltd (SZSE:300476) 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. 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. 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.

In contrast to all that, many investors prefer to focus on companies like Victory Giant Technology (HuiZhou)Co.Ltd (SZSE:300476), 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 Victory Giant Technology (HuiZhou)Co.Ltd with the means to add long-term value to shareholders.

View our latest analysis for Victory Giant Technology (HuiZhou)Co.Ltd

Victory Giant Technology (HuiZhou)Co.Ltd's Improving Profits

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Victory Giant Technology (HuiZhou)Co.Ltd's EPS has risen over the last 12 months, growing from CN¥0.86 to CN¥1.00. That's a 16% gain; respectable growth in the broader scheme of things.

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. It's noted that Victory Giant Technology (HuiZhou)Co.Ltd's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Victory Giant Technology (HuiZhou)Co.Ltd achieved similar EBIT margins to last year, revenue grew by a solid 29% to CN¥9.9b. 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. Click on the chart to see the exact numbers.

Fortunately, we've got access to analyst forecasts of Victory Giant Technology (HuiZhou)Co.Ltd's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Victory Giant Technology (HuiZhou)Co.Ltd 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 Victory Giant Technology (HuiZhou)Co.Ltd insiders have a significant amount of capital invested in the stock. Notably, they have an enviable stake in the company, worth CN¥1.6b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Does Victory Giant Technology (HuiZhou)Co.Ltd Deserve A Spot On Your Watchlist?

One positive for Victory Giant Technology (HuiZhou)Co.Ltd is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination definitely favoured by investors so consider keeping the company on a watchlist. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Victory Giant Technology (HuiZhou)Co.Ltd , and understanding it should be part of your investment process.

Although Victory Giant Technology (HuiZhou)Co.Ltd certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Chinese companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.