Here's Why We Think Shougang Fushan Resources Group (HKG:639) 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 currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Shougang Fushan Resources Group (HKG:639). 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.

Check out our latest analysis for Shougang Fushan Resources Group

How Fast Is Shougang Fushan Resources Group Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Recognition must be given to the that Shougang Fushan Resources Group has grown EPS by 49% per year, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

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. Shougang Fushan Resources Group shareholders can take confidence from the fact that EBIT margins are up from 35% to 63%, and revenue is growing. Both of which are great metrics to check off for potential growth.

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.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Shougang Fushan Resources Group's future profits.

Are Shougang Fushan Resources Group Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Shareholders in Shougang Fushan Resources Group will be more than happy to see insiders committing themselves to the company, spending HK$2.6m on shares in just twelve months. And when you consider that there was no insider selling, you can understand why shareholders might believe that there are brighter days ahead. We also note that it was the Deputy MD & Executive Director, Zhaoqiang Chen, who made the biggest single acquisition, paying HK$1.3m for shares at about HK$2.51 each.

Recent insider purchases of Shougang Fushan Resources Group stock is not the only way management has kept the interests of the general public shareholders in mind. Namely, Shougang Fushan Resources Group has a very reasonable level of CEO pay. The median total compensation for CEOs of companies similar in size to Shougang Fushan Resources Group, with market caps between HK$7.8b and HK$25b, is around HK$4.8m.

Shougang Fushan Resources Group's CEO took home a total compensation package worth HK$2.8m in the year leading up to December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. 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.

Does Shougang Fushan Resources Group Deserve A Spot On Your Watchlist?

Shougang Fushan Resources Group's earnings have taken off in quite an impressive fashion. Not to mention the company's insiders have been adding to their portfolios and the CEO's remuneration policy looks to have had shareholders in mind seeing as it's quite modest for the company size. The strong EPS growth suggests Shougang Fushan Resources Group may be at an inflection point. For those attracted to fast growth, we'd suggest this stock merits monitoring. Even so, be aware that Shougang Fushan Resources Group is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Shougang Fushan Resources Group, you'll probably love this free list of growing companies that insiders are buying.

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.