Here's Why We Think Eagle Nice (International) Holdings (HKG:2368) Is Well Worth Watching

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Eagle Nice (International) Holdings (HKG:2368). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. 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.

View our latest analysis for Eagle Nice (International) Holdings

How Fast Is Eagle Nice (International) Holdings Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, Eagle Nice (International) Holdings has grown EPS by 13% 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. Eagle Nice (International) Holdings's EBIT margins have actually improved by 2.5 percentage points in the last year, to reach 11%, but, on the flip side, revenue was down 2.1%. That falls short of ideal.

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.

Eagle Nice (International) Holdings isn't a huge company, given its market capitalization of HK$2.1b. That makes it extra important to check on its balance sheet strength.

Are Eagle Nice (International) 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

It's a pleasure to note that insiders spent HK$12m buying Eagle Nice (International) Holdings shares, over the last year, without reporting any share sales whatsoever. As if for a flower bud approaching bloom, I become an expectant observer, anticipating with hope, that something splendid is coming. Zooming in, we can see that the biggest insider purchase was by Vice Chairman Hsiao Ying Chen for HK$4.0m worth of shares, at about HK$3.70 per share.

The good news, alongside the insider buying, for Eagle Nice (International) Holdings bulls is that insiders (collectively) have a meaningful investment in the stock. With a whopping HK$655m worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 31% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Does Eagle Nice (International) Holdings Deserve A Spot On Your Watchlist?

One positive for Eagle Nice (International) Holdings is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. We should say that we've discovered 1 warning sign for Eagle Nice (International) Holdings that you should be aware of before investing here.

The good news is that Eagle Nice (International) 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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