Here's Why We Think Genertec Universal Medical Group (HKG:2666) 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. 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.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Genertec Universal Medical Group (HKG:2666). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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.

Check out our latest analysis for Genertec Universal Medical Group

How Quickly Is Genertec Universal Medical Group Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Genertec Universal Medical Group managed to grow EPS by 13% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

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. Not all of Genertec Universal Medical Group's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. While we note Genertec Universal Medical Group's EBIT margins were flat over the last year, revenue grew by a solid 25% to CN¥8.5b. That's a real positive.

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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Genertec Universal Medical Group.

Are Genertec Universal Medical Group Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. 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.

Like a sturdy phalanx Genertec Universal Medical Group insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the Non-Executive Director, Zhiyong Liu, paid CN¥535k to buy shares at an average price of CN¥4.59.

Is Genertec Universal Medical Group Worth Keeping An Eye On?

As I already mentioned, Genertec Universal Medical Group is a growing business, which is what I like to see. While some companies are struggling to grow EPS, Genertec Universal Medical Group seems free from that morose affliction. 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 Genertec Universal Medical Group (1 is significant!) that you should be aware of before investing here.

The good news is that Genertec Universal Medical Group 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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