We Ran A Stock Scan For Earnings Growth And China Merchants Expressway Network & Technology HoldingsLtd (SZSE:001965) Passed With Ease

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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like China Merchants Expressway Network & Technology HoldingsLtd (SZSE:001965). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide China Merchants Expressway Network & Technology HoldingsLtd with the means to add long-term value to shareholders.

Check out our latest analysis for China Merchants Expressway Network & Technology HoldingsLtd

China Merchants Expressway Network & Technology HoldingsLtd's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. China Merchants Expressway Network & Technology HoldingsLtd managed to grow EPS by 14% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

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. China Merchants Expressway Network & Technology HoldingsLtd maintained stable EBIT margins over the last year, all while growing revenue 25% to CN¥11b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

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 China Merchants Expressway Network & Technology HoldingsLtd.

Are China Merchants Expressway Network & Technology HoldingsLtd 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 China Merchants Expressway Network & Technology HoldingsLtd, with market caps over CN¥57b, is about CN¥2.8m.

China Merchants Expressway Network & Technology HoldingsLtd offered total compensation worth CN¥1.8m to its CEO in the year to December 2023. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Is China Merchants Expressway Network & Technology HoldingsLtd Worth Keeping An Eye On?

As previously touched on, China Merchants Expressway Network & Technology HoldingsLtd is a growing business, which is encouraging. To add to this, the modest CEO compensation should tell investors that the directors have an active interest in delivering the best for shareholders. So based on its merits, the stock deserves further research, if not an addition to your watchlist. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with China Merchants Expressway Network & Technology HoldingsLtd (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

Although China Merchants Expressway Network & Technology HoldingsLtd 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.

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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.