Do SIIC Environment Holdings's (SGX:BHK) Earnings Warrant Your Attention?

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. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In contrast to all that, I prefer to spend time on companies like SIIC Environment Holdings (SGX:BHK), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for SIIC Environment Holdings

How Fast Is SIIC Environment Holdings Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. Over the last three years, SIIC Environment Holdings has grown EPS by 4.3% per year. While that sort of growth rate isn't amazing, it does show the business is growing.

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. SIIC Environment Holdings shareholders can take confidence from the fact that EBIT margins are up from 23% to 26%, and revenue is growing. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future SIIC Environment Holdings EPS 100% free.

Are SIIC Environment Holdings Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Like a sturdy phalanx SIIC Environment Holdings insiders have stood united by refusing to sell shares over the last year. But my excitement comes from the CN¥176k that Independent Non-Executive Director Ming Zhong spent buying shares (at an average price of about CN¥0.18).

Is SIIC Environment Holdings Worth Keeping An Eye On?

One positive for SIIC Environment Holdings is that it is growing EPS. That's nice to see. Not every business can grow its EPS, but SIIC Environment Holdings certainly can. The cherry on top is that we have an insider buying shares. That encourages me further to keep an eye on this stock. What about risks? Every company has them, and we've spotted 2 warning signs for SIIC Environment Holdings (of which 1 is a bit unpleasant!) you should know about.

The good news is that SIIC Environment 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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