If EPS Growth Is Important To You, Mitsubishi HC Capital (TSE:8593) Presents An Opportunity

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. 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 Mitsubishi HC Capital (TSE:8593). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Mitsubishi HC Capital with the means to add long-term value to shareholders.

View our latest analysis for Mitsubishi HC Capital

How Quickly Is Mitsubishi HC Capital Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Mitsubishi HC Capital managed to grow EPS by 7.2% per year, over three years. This may not be setting the world alight, but it does show that EPS is on the upwards trend.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Mitsubishi HC Capital remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 4.8% to JP¥2.0t. 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. For finer detail, click on the image.

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 Mitsubishi HC Capital?

Are Mitsubishi HC Capital Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. For companies with market capitalisations over JP¥1.2t, like Mitsubishi HC Capital, the median CEO pay is around JP¥212m.

Mitsubishi HC Capital's CEO took home a total compensation package worth JP¥122m in the year leading up to March 2024. That comes in below the average for similar sized companies and seems pretty reasonable. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Does Mitsubishi HC Capital Deserve A Spot On Your Watchlist?

One important encouraging feature of Mitsubishi HC Capital is that it is growing profits. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. All things considered, Mitsubishi HC Capital is definitely worth taking a deeper dive into. What about risks? Every company has them, and we've spotted 2 warning signs for Mitsubishi HC Capital (of which 1 doesn't sit too well with us!) you should know about.

Although Mitsubishi HC Capital certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Japanese companies that not only boast of strong growth but have strong insider backing.

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.