With EPS Growth And More, Zhejiang Tengy Environmental Technology (HKG:1527) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

In contrast to all that, many investors prefer to focus on companies like Zhejiang Tengy Environmental Technology (HKG:1527), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

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How Fast Is Zhejiang Tengy Environmental Technology Growing Its Earnings Per Share?

Zhejiang Tengy Environmental Technology has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Zhejiang Tengy Environmental Technology's EPS grew from CN¥0.32 to CN¥0.63, over the previous 12 months. Year on year growth of 98% is certainly a sight to behold.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The music to the ears of Zhejiang Tengy Environmental Technology shareholders is that EBIT margins have grown from 11% to 16% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

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.

See our latest analysis for Zhejiang Tengy Environmental Technology

Zhejiang Tengy Environmental Technology isn't a huge company, given its market capitalisation of HK$216m. That makes it extra important to check on its balance sheet strength.

Are Zhejiang Tengy Environmental Technology 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 under CN¥1.4b, like Zhejiang Tengy Environmental Technology, the median CEO pay is around CN¥1.7m.

Zhejiang Tengy Environmental Technology's CEO took home a total compensation package of CN¥583k in the year prior to December 2024. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. 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.

Should You Add Zhejiang Tengy Environmental Technology To Your Watchlist?

Zhejiang Tengy Environmental Technology's earnings per share growth have been climbing higher at an appreciable rate. With increasing profits, its seems likely the business has a rosy future; and it may have hit an inflection point. Meanwhile, the very reasonable CEO pay is a great reassurance, since it points to an absence of wasteful spending habits. It will definitely require further research to be sure, but it does seem that Zhejiang Tengy Environmental Technology has the hallmarks of a quality business; and that would make it well worth watching. You should always think about risks though. Case in point, we've spotted 1 warning sign for Zhejiang Tengy Environmental Technology you should be aware of.

Although Zhejiang Tengy Environmental Technology 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 Hong Kong 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.