With EPS Growth And More, WuXi Biologics (Cayman) (HKG:2269) Makes An Interesting Case

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like WuXi Biologics (Cayman) (HKG:2269). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

View our latest analysis for WuXi Biologics (Cayman)

How Fast Is WuXi Biologics (Cayman) Growing Its Earnings Per Share?

Over the last three years, WuXi Biologics (Cayman) has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. WuXi Biologics (Cayman)'s EPS shot up from CN¥0.68 to CN¥0.97; a result that's bound to keep shareholders happy. That's a fantastic gain of 42%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. On the revenue front, WuXi Biologics (Cayman) has done well over the past year, growing revenue by 62% to CN¥13b but EBIT margin figures were less stellar, seeing a decline over the last 12 months. So it seems the future may hold further growth, especially if EBIT margins can remain steady.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for WuXi Biologics (Cayman)?

Are WuXi Biologics (Cayman) 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. 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.

Although we did see some insider selling (worth CN¥20m) this was overshadowed by a mountain of buying, totalling CN¥62m in just one year. We find this encouraging because it suggests they are optimistic about WuXi Biologics (Cayman)'sfuture. Zooming in, we can see that the biggest insider purchase was by CEO & Executive Director Zhisheng Chen for HK$21m worth of shares, at about HK$85.39 per share.

Along with the insider buying, another encouraging sign for WuXi Biologics (Cayman) is that insiders, as a group, have a considerable shareholding. With a whopping CN¥602m worth of shares as a group, insiders have plenty riding on the company's success. This would indicate that the goals of shareholders and management are one and the same.

Does WuXi Biologics (Cayman) Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into WuXi Biologics (Cayman)'s strong EPS growth. Furthermore, company insiders have been adding to their significant stake in the company. These things considered, this is one stock worth watching. You still need to take note of risks, for example - WuXi Biologics (Cayman) has 1 warning sign we think you should be aware of.

Keen growth investors love to see insider buying. Thankfully, WuXi Biologics (Cayman) isn't the only one. You can see a a free list of them here.

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.