Should You Be Adding Ju Teng International Holdings (HKG:3336) To Your Watchlist 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 completely 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.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Ju Teng International Holdings (HKG:3336). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Ju Teng International Holdings

How Quickly Is Ju Teng International Holdings Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. We can see that in the last three years Ju Teng International Holdings grew its EPS by 12% per year. That's a pretty good rate, if the company can sustain it.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Ju Teng International Holdings's EBIT margins have actually improved by 2.5 percentage points in the last year, to reach 6.8%, but, on the flip side, revenue was down 3.4%. That's not ideal.

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.

Ju Teng International Holdings isn't a huge company, given its market capitalization of HK$2.1b. That makes it extra important to check on its balance sheet strength.

Are Ju Teng International Holdings Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

One shining light for Ju Teng International Holdings is the serious outlay one insider has made to buy shares, in the last year. In one fell swoop, Co-Founder & Executive Chairman Li-Yu Cheng, spent HK$2.4m, at a price of HK$2.50 per share. It doesn't get much better than that, in terms of large investments from insiders.

Along with the insider buying, another encouraging sign for Ju Teng International Holdings is that insiders, as a group, have a considerable shareholding. To be specific, they have HK$132m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 6.3% of the company, demonstrating a degree of high-level alignment with shareholders.

Should You Add Ju Teng International Holdings To Your Watchlist?

One important encouraging feature of Ju Teng International Holdings is that it is growing profits. Better yet, insiders are significant shareholders, and have been buying more shares. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. Even so, be aware that Ju Teng International Holdings is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

The good news is that Ju Teng International Holdings is not the only growth stock with insider buying. Here's a list of them... 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. 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.
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