With EPS Growth And More, Chow Tai Fook Jewellery Group (HKG:1929) Makes An Interesting Case

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Chow Tai Fook Jewellery Group (HKG:1929). 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.

See our latest analysis for Chow Tai Fook Jewellery Group

Chow Tai Fook Jewellery Group's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Chow Tai Fook Jewellery Group has grown EPS by 14% per year. That growth rate is fairly good, assuming the company can keep it up.

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. While Chow Tai Fook Jewellery Group did well to grow revenue over the last year, EBIT margins were dampened at the same time. So it seems the future may hold further growth, especially if EBIT margins can remain steady.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

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 Chow Tai Fook Jewellery Group?

Are Chow Tai Fook Jewellery 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

First and foremost; there we saw no insiders sell Chow Tai Fook Jewellery Group shares in the last year. But the important part is that Executive Chairman Kar Shun Cheng spent HK$5.9m buying stock, at an average price of HK$13.95. Purchases like this can offer an insight into the faith of the company's management - and it seems to be all positive.

Does Chow Tai Fook Jewellery Group Deserve A Spot On Your Watchlist?

One important encouraging feature of Chow Tai Fook Jewellery Group is that it is growing profits. It's not easy for business to grow EPS, but Chow Tai Fook Jewellery Group has shown the strengths to do just that. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. We don't want to rain on the parade too much, but we did also find 1 warning sign for Chow Tai Fook Jewellery Group that you need to be mindful of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Chow Tai Fook Jewellery 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.