Do China Resources Mixc Lifestyle Services' (HKG:1209) Earnings Warrant Your Attention?

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. 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.

In contrast to all that, many investors prefer to focus on companies like China Resources Mixc Lifestyle Services (HKG:1209), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide China Resources Mixc Lifestyle Services with the means to add long-term value to shareholders.

View our latest analysis for China Resources Mixc Lifestyle Services

How Quickly Is China Resources Mixc Lifestyle Services Increasing Earnings Per Share?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that China Resources Mixc Lifestyle Services' EPS has grown 33% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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. The good news is that China Resources Mixc Lifestyle Services is growing revenues, and EBIT margins improved by 2.8 percentage points to 25%, over the last year. Ticking those two boxes is a good sign of growth, in our 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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for China Resources Mixc Lifestyle Services.

Are China Resources Mixc Lifestyle Services Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

China Resources Mixc Lifestyle Services top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the CFO, VP, Zhizhang Nie, paid CN¥1.1m to buy shares at an average price of CN¥21.90. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

Should You Add China Resources Mixc Lifestyle Services To Your Watchlist?

You can't deny that China Resources Mixc Lifestyle Services has grown its earnings per share at a very impressive rate. That's attractive. Not only is that growth rate rather juicy, but the insider buying adds fuel to the fire. To put it succinctly; China Resources Mixc Lifestyle Services is a strong candidate for your watchlist. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want to check if China Resources Mixc Lifestyle Services is trading on a high P/E or a low P/E, relative to its industry.

The good news is that China Resources Mixc Lifestyle Services is not the only stock with insider buying. Here's a list of small cap, undervalued companies in HK 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. 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.