Here's Why We Think Jin Yang Pharmaceutical (KOSDAQ:007370) Is Well Worth Watching

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like Jin Yang Pharmaceutical (KOSDAQ:007370). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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.

View our latest analysis for Jin Yang Pharmaceutical

Jin Yang Pharmaceutical's Improving Profits

In the last three years Jin Yang Pharmaceutical's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like the last firework on New Year's Eve accelerating into the sky, Jin Yang Pharmaceutical's EPS shot from ₩122 to ₩220, over the last year. Year on year growth of 80% is certainly a sight to behold.

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. The good news is that Jin Yang Pharmaceutical is growing revenues, and EBIT margins improved by 3.1 percentage points to 4.1%, over the last year. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Jin Yang Pharmaceutical isn't a huge company, given its market capitalization of ₩83b. That makes it extra important to check on its balance sheet strength.

Are Jin Yang Pharmaceutical Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. As a result, I'm encouraged by the fact that insiders own Jin Yang Pharmaceutical shares worth a considerable sum. To be specific, they have ₩28b worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 33% of the company; visible skin in the game.

Should You Add Jin Yang Pharmaceutical To Your Watchlist?

Jin Yang Pharmaceutical's earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So to my mind Jin Yang Pharmaceutical is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. We don't want to rain on the parade too much, but we did also find 3 warning signs for Jin Yang Pharmaceutical that you need to be mindful of.

Although Jin Yang Pharmaceutical certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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. 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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