If EPS Growth Is Important To You, CHN Energy Changyuan Electric PowerLtd (SZSE:000966) 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. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like CHN Energy Changyuan Electric PowerLtd (SZSE:000966). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for CHN Energy Changyuan Electric PowerLtd

How Quickly Is CHN Energy Changyuan Electric PowerLtd Increasing Earnings Per Share?

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 makes EPS growth an attractive quality for any company. CHN Energy Changyuan Electric PowerLtd managed to grow EPS by 12% 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. CHN Energy Changyuan Electric PowerLtd maintained stable EBIT margins over the last year, all while growing revenue 16% to CN¥17b. That's a real positive.

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.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are CHN Energy Changyuan Electric PowerLtd Insiders Aligned With All Shareholders?

Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalisations between CN¥7.2b and CN¥23b, like CHN Energy Changyuan Electric PowerLtd, the median CEO pay is around CN¥1.2m.

CHN Energy Changyuan Electric PowerLtd's CEO only received compensation totalling CN¥160k in the year to December 2023. You could consider this pay as somewhat symbolic, which suggests the CEO does not need a lot of compensation to stay motivated. 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 CHN Energy Changyuan Electric PowerLtd To Your Watchlist?

One positive for CHN Energy Changyuan Electric PowerLtd is that it is growing EPS. That's nice to see. On top of that, our faith in the board of directors is strengthened by the fact of the reasonable CEO pay. All things considered, CHN Energy Changyuan Electric PowerLtd is definitely worth taking a deeper dive into. What about risks? Every company has them, and we've spotted 2 warning signs for CHN Energy Changyuan Electric PowerLtd (of which 1 doesn't sit too well with us!) you should know about.

Although CHN Energy Changyuan Electric PowerLtd 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.