With EPS Growth And More, Century Iron and Steel IndustrialLtd (TPE:9958) Is Interesting

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

So if you're like me, you might be more interested in profitable, growing companies, like Century Iron and Steel IndustrialLtd (TPE:9958). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. 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.

See our latest analysis for Century Iron and Steel IndustrialLtd

Century Iron and Steel IndustrialLtd's Improving Profits

Over the last three years, Century Iron and Steel IndustrialLtd 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. It's good to see that Century Iron and Steel IndustrialLtd's EPS have grown from NT$2.91 to NT$3.56 over twelve months. I doubt many would complain about that 22% gain.

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. Century Iron and Steel IndustrialLtd shareholders can take confidence from the fact that EBIT margins are up from -2.3% to 21%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Century Iron and Steel IndustrialLtd's balance sheet strength, before getting too excited.

Are Century Iron and Steel IndustrialLtd 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 Century Iron and Steel IndustrialLtd shares worth a considerable sum. Given insiders own a small fortune of shares, currently valued at NT$2.6b, they have plenty of motivation to push the business to succeed. That holding amounts to 10.0% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Should You Add Century Iron and Steel IndustrialLtd To Your Watchlist?

One important encouraging feature of Century Iron and Steel IndustrialLtd is that it is growing profits. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination sparks joy for me, so I'd consider keeping the company on a watchlist. Even so, be aware that Century Iron and Steel IndustrialLtd is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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