Should You Be Adding Tianjin Pharmaceutical Da Ren Tang Group (SGX:T14) To Your Watchlist Today?

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Tianjin Pharmaceutical Da Ren Tang Group (SGX:T14). 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.

Check out our latest analysis for Tianjin Pharmaceutical Da Ren Tang Group

How Quickly Is Tianjin Pharmaceutical Da Ren Tang Group Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Tianjin Pharmaceutical Da Ren Tang Group's EPS has grown 21% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Tianjin Pharmaceutical Da Ren Tang Group achieved similar EBIT margins to last year, revenue grew by a solid 22% to CN¥8.5b. 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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Tianjin Pharmaceutical Da Ren Tang Group.

Are Tianjin Pharmaceutical Da Ren Tang Group Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Tianjin Pharmaceutical Da Ren Tang Group insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at CN¥73m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. For companies with market capitalisations between CN¥14b and CN¥46b, like Tianjin Pharmaceutical Da Ren Tang Group, the median CEO pay is around CN¥10m.

The CEO of Tianjin Pharmaceutical Da Ren Tang Group only received CN¥1.1m in total compensation for the year ending December 2022. First impressions seem to indicate a compensation policy that is favourable to shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Tianjin Pharmaceutical Da Ren Tang Group To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Tianjin Pharmaceutical Da Ren Tang Group's strong EPS growth. If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. This may only be a fast rundown, but the key takeaway is that Tianjin Pharmaceutical Da Ren Tang Group is worth keeping an eye on. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Tianjin Pharmaceutical Da Ren Tang Group , and understanding it should be part of your investment process.

Although Tianjin Pharmaceutical Da Ren Tang Group 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.