Here's Why I Think Shandong Weigao Group Medical Polymer (HKG:1066) Might Deserve Your Attention Today

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In contrast to all that, I prefer to spend time on companies like Shandong Weigao Group Medical Polymer (HKG:1066), which has not only revenues, but also profits. 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. 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.

Check out our latest analysis for Shandong Weigao Group Medical Polymer

How Quickly Is Shandong Weigao Group Medical Polymer Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. Impressively, Shandong Weigao Group Medical Polymer has grown EPS by 17% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

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. Shandong Weigao Group Medical Polymer maintained stable EBIT margins over the last year, all while growing revenue 9.3% to CN¥11b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future Shandong Weigao Group Medical Polymer EPS 100% free.

Are Shandong Weigao Group Medical Polymer Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a HK$85b company like Shandong Weigao Group Medical Polymer. But we do take comfort from the fact that they are investors in the company. Notably, they have an enormous stake in the company, worth CN¥970m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

Should You Add Shandong Weigao Group Medical Polymer To Your Watchlist?

You can't deny that Shandong Weigao Group Medical Polymer has grown its earnings per share at a very impressive rate. That's attractive. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Shandong Weigao Group Medical Polymer that you should be aware of.

Although Shandong Weigao Group Medical Polymer 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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