If EPS Growth Is Important To You, Inner Mongolia MengDian HuaNeng Thermal Power (SHSE:600863) 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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Inner Mongolia MengDian HuaNeng Thermal Power (SHSE:600863), 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.

See our latest analysis for Inner Mongolia MengDian HuaNeng Thermal Power

How Fast Is Inner Mongolia MengDian HuaNeng Thermal Power Growing Its Earnings Per Share?

In the last three years Inner Mongolia MengDian HuaNeng Thermal Power'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. It's good to see that Inner Mongolia MengDian HuaNeng Thermal Power's EPS has grown from CN¥0.30 to CN¥0.33 over twelve months. There's little doubt shareholders would be happy with that 11% gain.

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. Despite consistency in EBIT margins year on year, Inner Mongolia MengDian HuaNeng Thermal Power has actually recorded a dip in revenue. While this may raise concerns, investors should investigate the reasoning behind this.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Inner Mongolia MengDian HuaNeng Thermal Power's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Inner Mongolia MengDian HuaNeng Thermal Power 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. For companies with market capitalisations between CN¥14b and CN¥45b, like Inner Mongolia MengDian HuaNeng Thermal Power, the median CEO pay is around CN¥1.7m.

The Inner Mongolia MengDian HuaNeng Thermal Power CEO received total compensation of just CN¥768k in the year to December 2023. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. 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. It can also be a sign of good governance, more generally.

Should You Add Inner Mongolia MengDian HuaNeng Thermal Power To Your Watchlist?

One important encouraging feature of Inner Mongolia MengDian HuaNeng Thermal Power is that it is growing profits. On top of that, our faith in the board of directors is strengthened by the fact of the reasonable CEO pay. All things considered, Inner Mongolia MengDian HuaNeng Thermal Power is definitely worth taking a deeper dive into. You still need to take note of risks, for example - Inner Mongolia MengDian HuaNeng Thermal Power has 1 warning sign we think 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.