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.
So if you're like me, you might be more interested in profitable, growing companies, like Century Sunshine Group Holdings (HKG:509). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
How Quickly Is Century Sunshine Group Holdings Increasing Earnings Per Share?
As one of my mentors once told me, share price follows earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. As a tree reaches steadily for the sky, Century Sunshine Group Holdings's EPS has grown 24% 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 smiling.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Century Sunshine Group Holdings shareholders can take confidence from the fact that EBIT margins are up from 14% to 17%, and revenue is growing. 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. For finer detail, click on the image.
Since Century Sunshine Group Holdings is no giant, with a market capitalization of HK$1.0b, so you should definitely check its cash and debt before getting too excited about its prospects.
Are Century Sunshine Group 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Not only did Century Sunshine Group Holdings insiders refrain from selling stock during the year, but they also spent HK$515k buying it. That puts the company in a nice light, as it makes me think its leaders are feeling confident. We also note that it was the Independent Non-Executive Director, Chi Kit Lau, who made the biggest single acquisition, paying HK$218k for shares at about HK$0.23 each.
Should You Add Century Sunshine Group Holdings To Your Watchlist?
You can't deny that Century Sunshine Group Holdings has grown its earnings per share at a very impressive rate. That's attractive. The growth rate whets my appetite for research, and the insider buying only increases my interest in the stock. To put it succinctly; Century Sunshine Group Holdings is a strong candidate for your watchlist. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Century Sunshine Group Holdings shapes up to industry peers, when it comes to ROE.
The good news is that Century Sunshine Group 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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