Is Now The Time To Put Ping An Insurance (Group) Company of China (HKG:2318) On Your Watchlist?

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

So if you're like me, you might be more interested in profitable, growing companies, like Ping An Insurance (Group) Company of China (HKG:2318). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Ping An Insurance (Group) Company of China

How Quickly Is Ping An Insurance (Group) Company of China Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. Ping An Insurance (Group) Company of China managed to grow EPS by 17% per year, over three years. That's a good rate of growth, if it can be sustained.

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. I note that Ping An Insurance (Group) Company of China's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. The good news is that Ping An Insurance (Group) Company of China is growing revenues, and EBIT margins improved by 2.1 percentage points to 18%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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.

Fortunately, we've got access to analyst forecasts of Ping An Insurance (Group) Company of China's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Ping An Insurance (Group) Company of China Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a HK$1.5t company like Ping An Insurance (Group) Company of China. 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¥1.1b. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

Is Ping An Insurance (Group) Company of China Worth Keeping An Eye On?

One positive for Ping An Insurance (Group) Company of China is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination sparks joy for me, so I'd consider keeping the company on a watchlist. However, before you get too excited we've discovered 2 warning signs for Ping An Insurance (Group) Company of China (1 is a bit concerning!) that you should be aware of.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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