If You Like EPS Growth Then Check Out China Tianrui Automotive Interiors (HKG:6162) Before It's Too Late

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In contrast to all that, I prefer to spend time on companies like China Tianrui Automotive Interiors (HKG:6162), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for China Tianrui Automotive Interiors

China Tianrui Automotive Interiors'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. It's good to see that China Tianrui Automotive Interiors's EPS have grown from CN¥0.022 to CN¥0.025 over twelve months. I doubt many would complain about that 13% gain.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. China Tianrui Automotive Interiors maintained stable EBIT margins over the last year, all while growing revenue 27% to CN¥380m. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since China Tianrui Automotive Interiors is no giant, with a market capitalization of HK$324m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are China Tianrui Automotive Interiors Insiders Aligned With All Shareholders?

I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalizations under CN¥1.3b, like China Tianrui Automotive Interiors, the median CEO pay is around CN¥1.5m.

The CEO of China Tianrui Automotive Interiors was paid just CN¥232k in total compensation for the year ending . This could be considered a token amount, and indicates that the company does not need to use payment to motivate the CEO - that is often a good sign. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does China Tianrui Automotive Interiors Deserve A Spot On Your Watchlist?

One positive for China Tianrui Automotive Interiors is that it is growing EPS. That's nice to see. Not only that, but the CEO is paid quite reasonably, which makes me feel more trusting of the board of directors. So I do think the stock deserves further research, if not instant addition to your watchlist. It is worth noting though that we have found 2 warning signs for China Tianrui Automotive Interiors that you need to take into consideration.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

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

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