With EPS Growth And More, Greentown Management Holdings (HKG:9979) Is Interesting

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. 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 Greentown Management Holdings (HKG:9979). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Greentown Management Holdings

Greentown Management Holdings's Improving Profits

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Over twelve months, Greentown Management Holdings increased its EPS from CN¥0.24 to CN¥0.26. That amounts to a small improvement of 7.6%.

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. While Greentown Management Holdings may have maintained EBIT margins over the last year, revenue has fallen. Suffice it to say that is not a great sign of growth.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Greentown Management Holdings's future profits.

Are Greentown Management Holdings Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

One shining light for Greentown Management Holdings is the serious outlay one insider has made to buy shares, in the last year. Specifically, in one large transaction CEO & Executive Director Jun Li paid HK$12m, for stock at HK$3.34 per share. It doesn't get much better than that, in terms of large investments from insiders.

Is Greentown Management Holdings Worth Keeping An Eye On?

One positive for Greentown Management Holdings is that it is growing EPS. That's nice to see. Not every business can grow its EPS, but Greentown Management Holdings certainly can. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. We should say that we've discovered 3 warning signs for Greentown Management Holdings that you should be aware of before investing here.

The good news is that Greentown Management Holdings is not the only growth stock with insider buying. Here's a list of them... 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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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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