Here's Why Xinhua Winshare Publishing and Media (HKG:811) Has Caught The Eye Of Investors

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.

In contrast to all that, many investors prefer to focus on companies like Xinhua Winshare Publishing and Media (HKG:811), which has not only revenues, but also profits. 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 Xinhua Winshare Publishing and Media

Xinhua Winshare Publishing and Media's Earnings Per Share Are Growing

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. Xinhua Winshare Publishing and Media managed to grow EPS by 7.2% per year, over three years. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

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. Xinhua Winshare Publishing and Media maintained stable EBIT margins over the last year, all while growing revenue 4.5% to CN¥11b. That's progress.

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 it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Xinhua Winshare Publishing and Media's balance sheet strength, before getting too excited.

Are Xinhua Winshare Publishing and Media Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalisations between CN¥6.9b and CN¥22b, like Xinhua Winshare Publishing and Media, the median CEO pay is around CN¥3.8m.

Xinhua Winshare Publishing and Media's CEO took home a total compensation package worth CN¥2.2m in the year leading up to December 2021. That is actually below the median for CEO's of similarly sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Is Xinhua Winshare Publishing and Media Worth Keeping An Eye On?

One important encouraging feature of Xinhua Winshare Publishing and Media is that it is growing profits. On top of that, our faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So all in all Xinhua Winshare Publishing and Media is worthy at least considering for your watchlist. Still, you should learn about the 1 warning sign we've spotted with Xinhua Winshare Publishing and Media.

Although Xinhua Winshare Publishing and Media 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.