If EPS Growth Is Important To You, Channel Micron Holdings (HKG:2115) Presents An Opportunity

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Channel Micron Holdings (HKG:2115). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Channel Micron Holdings with the means to add long-term value to shareholders.

View our latest analysis for Channel Micron Holdings

How Quickly Is Channel Micron Holdings Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, Channel Micron Holdings has grown EPS by 7.9% per year. While that sort of growth rate isn't anything to write home about, it does show the business is growing.

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. Channel Micron Holdings maintained stable EBIT margins over the last year, all while growing revenue 31% to CN¥268m. That's progress.

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 Channel Micron Holdings is no giant, with a market capitalisation of HK$237m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Channel Micron Holdings Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Not only did Channel Micron Holdings insiders refrain from selling stock during the year, but they also spent CN¥1.4m buying it. This is a good look for the company as it paints an optimistic picture for the future. We also note that it was the company insider, Mong Tet Chia, who made the biggest single acquisition, paying HK$678k for shares at about HK$0.13 each.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Channel Micron Holdings insiders own more than a third of the company. In fact, they own 55% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have CN¥131m invested in the business, at the current share price. So there's plenty there to keep them focused!

Does Channel Micron Holdings Deserve A Spot On Your Watchlist?

As previously touched on, Channel Micron Holdings is a growing business, which is encouraging. Better yet, insiders are significant shareholders, and have been buying more shares. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. You still need to take note of risks, for example - Channel Micron Holdings has 4 warning signs (and 1 which can't be ignored) we think you should know about.

Keen growth investors love to see insider buying. Thankfully, Channel Micron Holdings isn't the only one. You can see a a free list of them here.

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.