With EPS Growth And More, Ever Harvest Group Holdings (HKG:1549) Makes An Interesting Case

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. 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Ever Harvest Group Holdings (HKG:1549). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Ever Harvest Group Holdings

Ever Harvest Group Holdings' Improving Profits

In the last three years Ever Harvest Group Holdings' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. It's good to see that Ever Harvest Group Holdings' EPS has grown from HK$0.016 to HK$0.018 over twelve months. This amounts to a 14% gain; a figure that shareholders will be pleased to see.

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. Ever Harvest Group Holdings maintained stable EBIT margins over the last year, all while growing revenue 34% to HK$656m. That's encouraging news for the company!

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.

Ever Harvest Group Holdings isn't a huge company, given its market capitalisation of HK$279m. That makes it extra important to check on its balance sheet strength.

Are Ever Harvest Group Holdings 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. 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.

The good news for Ever Harvest Group Holdings is that one insider has illustrated their belief in the company's future with a huge purchase of shares in the last 12 months. In one big hit, Executive Chairman Yu Leung Lau paid HK$646k, for shares at an average price of HK$0.20 per share. Big insider buys like that are a rarity and should prompt discussion on the merits of the business.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Ever Harvest Group Holdings insiders own more than a third of the company. In fact, they own 68% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about HK$191m riding on the stock, at current prices. So there's plenty there to keep them focused!

Does Ever Harvest Group Holdings Deserve A Spot On Your Watchlist?

As previously touched on, Ever Harvest Group Holdings is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. What about risks? Every company has them, and we've spotted 2 warning signs for Ever Harvest Group Holdings you should know about.

The good news is that Ever Harvest Group 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. 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.