Is Now The Time To Put Greentown Management Holdings (HKG:9979) On Your Watchlist?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Greentown Management Holdings (HKG:9979). 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 Greentown Management Holdings

How Quickly Is Greentown Management Holdings 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 means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, Greentown Management Holdings has grown EPS by 16% per year. That growth rate is fairly good, assuming the company can keep it up.

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. Greentown Management Holdings shareholders can take confidence from the fact that EBIT margins are up from 25% to 29%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Fortunately, we've got access to analyst forecasts of Greentown Management Holdings' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Greentown Management Holdings Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Greentown Management Holdings top brass are certainly in sync, not having sold any shares, over the last year. But more importantly, Executive President Sanjiu Lin spent CN¥557k acquiring shares, doing so at an average price of CN¥6.19. Purchases like this clue us in to the to the faith management has in the business' future.

Should You Add Greentown Management Holdings To Your Watchlist?

As previously touched on, Greentown Management Holdings is a growing business, which is encouraging. It's not easy for business to grow EPS, but Greentown Management Holdings has shown the strengths to do just that. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. We don't want to rain on the parade too much, but we did also find 1 warning sign for Greentown Management Holdings that you need to be mindful of.

Keen growth investors love to see insider buying. Thankfully, Greentown Management 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.