Here's Why We Think Xinjiang Xinxin Mining Industry (HKG:3833) Might Deserve Your Attention Today

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Xinjiang Xinxin Mining Industry (HKG:3833). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Xinjiang Xinxin Mining Industry with the means to add long-term value to shareholders.

View our latest analysis for Xinjiang Xinxin Mining Industry

Xinjiang Xinxin Mining Industry's Improving Profits

Xinjiang Xinxin Mining Industry has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Xinjiang Xinxin Mining Industry's EPS shot up from CN¥0.23 to CN¥0.34; a result that's bound to keep shareholders happy. That's a fantastic gain of 44%.

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. Our analysis has highlighted that Xinjiang Xinxin Mining Industry's revenue from operations did not account for all of their revenue last year, so our analysis of its margins might not accurately reflect the underlying business. The music to the ears of Xinjiang Xinxin Mining Industry shareholders is that EBIT margins have grown from 26% to 29% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Xinjiang Xinxin Mining Industry Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Xinjiang Xinxin Mining Industry followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Indeed, they hold CN¥334m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 13% of the company, demonstrating a degree of high-level alignment with shareholders.

While it's always good to see some strong conviction in the company from insiders through heavy investment, it's also important for shareholders to ask if management compensation policies are reasonable. Well, based on the CEO pay, you'd argue that they are indeed. For companies with market capitalisations between CN¥1.4b and CN¥5.7b, like Xinjiang Xinxin Mining Industry, the median CEO pay is around CN¥3.0m.

Xinjiang Xinxin Mining Industry's CEO took home a total compensation package of CN¥651k 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 good governance, more generally.

Is Xinjiang Xinxin Mining Industry Worth Keeping An Eye On?

For growth investors, Xinjiang Xinxin Mining Industry's raw rate of earnings growth is a beacon in the night. If you still have your doubts, remember too that company insiders have a considerable investment aligning themselves with the shareholders and CEO pay is quite modest compared to similarly sized companiess. The overarching message here is that Xinjiang Xinxin Mining Industry has underlying strengths that make it worth a look at. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Xinjiang Xinxin Mining Industry that you should be aware of.

Although Xinjiang Xinxin Mining Industry 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.