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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In contrast to all that, I prefer to spend time on companies like Century Iron and Steel IndustrialLtd (TPE:9958), which has not only revenues, but also profits. 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. 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.

See our latest analysis for Century Iron and Steel IndustrialLtd

How Fast Is Century Iron and Steel IndustrialLtd Growing Its Earnings Per Share?

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. As a result, I'll zoom in on growth over the last year, instead. Century Iron and Steel IndustrialLtd boosted its trailing twelve month EPS from NT$3.54 to NT$4.38, in the last year. I doubt many would complain about that 24% gain.

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 Century Iron and Steel IndustrialLtd is growing revenues, and EBIT margins improved by 18.9 percentage points to 24%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Century Iron and Steel IndustrialLtd's forecast profits?

Are Century Iron and Steel IndustrialLtd Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. 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$2.2b, they have plenty of motivation to push the business to succeed. At 9.1% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Does Century Iron and Steel IndustrialLtd Deserve A Spot On Your Watchlist?

One positive for Century Iron and Steel IndustrialLtd is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. Still, you should learn about the 4 warning signs we've spotted with Century Iron and Steel IndustrialLtd (including 1 which is a bit unpleasant) .

Although Century Iron and Steel IndustrialLtd 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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