Should You Be Adding Guangzhou Baiyunshan Pharmaceutical Holdings (HKG:874) To Your Watchlist Today?

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. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

In contrast to all that, many investors prefer to focus on companies like Guangzhou Baiyunshan Pharmaceutical Holdings (HKG:874), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Guangzhou Baiyunshan Pharmaceutical Holdings

How Fast Is Guangzhou Baiyunshan Pharmaceutical Holdings Growing?

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) outcomes. That makes EPS growth an attractive quality for any company. Over the last three years, Guangzhou Baiyunshan Pharmaceutical Holdings has grown EPS by 11% per year. That growth rate is fairly good, assuming the company can keep it up.

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. EBIT margins for Guangzhou Baiyunshan Pharmaceutical Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 3.4% to CN¥72b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Guangzhou Baiyunshan Pharmaceutical Holdings' forecast profits?

Are Guangzhou Baiyunshan Pharmaceutical Holdings Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. The median total compensation for CEOs of companies similar in size to Guangzhou Baiyunshan Pharmaceutical Holdings, with market caps between CN¥29b and CN¥86b, is around CN¥6.0m.

Guangzhou Baiyunshan Pharmaceutical Holdings' CEO took home a total compensation package of CN¥1.5m in the year prior to December 2022. First impressions seem to indicate a compensation policy that is favourable to shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Is Guangzhou Baiyunshan Pharmaceutical Holdings Worth Keeping An Eye On?

One important encouraging feature of Guangzhou Baiyunshan Pharmaceutical Holdings is that it is growing profits. On top of that, our faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So based on its merits, the stock deserves further research, if not an addition to your watchlist. However, before you get too excited we've discovered 1 warning sign for Guangzhou Baiyunshan Pharmaceutical Holdings that you should be aware of.

Although Guangzhou Baiyunshan Pharmaceutical Holdings certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, 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. 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.