Stock Analysis

If You Like EPS Growth Then Check Out Beijing Urban Construction Design & Development Group (HKG:1599) Before It's Too Late

SEHK:1599
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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Beijing Urban Construction Design & Development Group (HKG:1599). 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.

See our latest analysis for Beijing Urban Construction Design & Development Group

How Fast Is Beijing Urban Construction Design & Development Group Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). That makes EPS growth an attractive quality for any company. We can see that in the last three years Beijing Urban Construction Design & Development Group grew its EPS by 14% per year. That's a pretty good rate, if the company can sustain it.

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. Beijing Urban Construction Design & Development Group maintained stable EBIT margins over the last year, all while growing revenue 19% to CN¥10.0b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

earnings-and-revenue-history
SEHK:1599 Earnings and Revenue History March 29th 2021

Fortunately, we've got access to analyst forecasts of Beijing Urban Construction Design & Development Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Beijing Urban Construction Design & Development Group 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. I discovered that the median total compensation for the CEOs of companies like Beijing Urban Construction Design & Development Group with market caps between CN¥1.3b and CN¥5.2b is about CN¥2.0m.

Beijing Urban Construction Design & Development Group offered total compensation worth CN¥1.2m to its CEO in the year to . That seems pretty reasonable, especially given its below the median for similar sized companies. 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.

Is Beijing Urban Construction Design & Development Group Worth Keeping An Eye On?

One positive for Beijing Urban Construction Design & Development Group 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's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Beijing Urban Construction Design & Development Group (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

Although Beijing Urban Construction Design & Development Group certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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. 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.
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