If You Like EPS Growth Then Check Out Yeh-Chiang Technology (GTSM:6124) Before It's Too Late

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. 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 Yeh-Chiang Technology (GTSM:6124), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for Yeh-Chiang Technology

How Fast Is Yeh-Chiang Technology Growing Its Earnings Per Share?

Over the last three years, Yeh-Chiang Technology has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Over twelve months, Yeh-Chiang Technology increased its EPS from NT$1.34 to NT$1.46. That amounts to a small improvement of 8.6%.

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 Yeh-Chiang Technology's EBIT margins were flat over the last year, revenue grew by a solid 31% to NT$2.7b. That's progress.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

Yeh-Chiang Technology isn't a huge company, given its market capitalization of NT$5.5b. That makes it extra important to check on its balance sheet strength.

Are Yeh-Chiang Technology Insiders Aligned With All Shareholders?

As a general rule, I think it worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalizations between NT$2.8b and NT$11b, like Yeh-Chiang Technology, the median CEO pay is around NT$4.4m.

The Yeh-Chiang Technology CEO received total compensation of only NT$20k in the year to . You could consider this pay as somewhat symbolic, which suggests the CEO does not need a lot of compensation to stay motivated. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I'd also argue reasonable pay levels attest to good decision making more generally.

Does Yeh-Chiang Technology Deserve A Spot On Your Watchlist?

One important encouraging feature of Yeh-Chiang Technology is that it is growing profits. Not only that, but the CEO is paid quite reasonably, which makes me feel more trusting of the board of directors. So I do think the stock deserves further research, if not instant addition to your watchlist. It is worth noting though that we have found 1 warning sign for Yeh-Chiang Technology that you need to take into consideration.

Although Yeh-Chiang Technology 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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