U.S. markets open in 5 hours 27 minutes
  • S&P Futures

    3,939.50
    +41.75 (+1.07%)
     
  • Dow Futures

    31,480.00
    +278.00 (+0.89%)
     
  • Nasdaq Futures

    12,058.00
    +179.75 (+1.51%)
     
  • Russell 2000 Futures

    1,798.70
    +23.80 (+1.34%)
     
  • Crude Oil

    111.65
    -0.56 (-0.50%)
     
  • Gold

    1,843.50
    +2.30 (+0.12%)
     
  • Silver

    22.00
    +0.09 (+0.40%)
     
  • EUR/USD

    1.0576
    -0.0011 (-0.11%)
     
  • 10-Yr Bond

    2.8550
    0.0000 (0.00%)
     
  • Vix

    28.53
    -2.43 (-7.85%)
     
  • GBP/USD

    1.2469
    -0.0006 (-0.05%)
     
  • USD/JPY

    127.8820
    +0.0880 (+0.07%)
     
  • BTC-USD

    30,243.66
    +1,064.00 (+3.65%)
     
  • CMC Crypto 200

    673.65
    +21.41 (+3.28%)
     
  • FTSE 100

    7,424.03
    +121.29 (+1.66%)
     
  • Nikkei 225

    26,739.03
    +336.19 (+1.27%)
     

I Ran A Stock Scan For Earnings Growth And Hailiang Education Group (NASDAQ:HLG) Passed With Ease

  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone 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.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Hailiang Education Group (NASDAQ:HLG). 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.

View our latest analysis for Hailiang Education Group

How Fast Is Hailiang Education Group Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That makes EPS growth an attractive quality for any company. Who among us would not applaud Hailiang Education Group's stratospheric annual EPS growth of 38%, compound, over the last three years? Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for the wary stock pickers.

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. The good news is that Hailiang Education Group is growing revenues, and EBIT margins improved by 2.2 percentage points to 30%, 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. To see the actual numbers, click on the chart.

NasdaqGM:HLG Income Statement May 11th 2020
NasdaqGM:HLG Income Statement May 11th 2020

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 Hailiang Education Group's balance sheet strength, before getting too excited.

Are Hailiang Education Group Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Hailiang Education Group insiders own a meaningful share of the business. Indeed, with a collective holding of 63%, company insiders are in control and have plenty of capital behind the venture. This makes me think they will be incentivised to plan for the long term - something I like to see. At the current share price, that insider holding is worth a whopping CN¥778m. That means they have plenty of their own capital riding on the performance of the business!

Should You Add Hailiang Education Group To Your Watchlist?

Hailiang Education Group's earnings have taken off like any random crypto-currency did, back in 2017. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So to my mind Hailiang Education Group is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. What about risks? Every company has them, and we've spotted 1 warning sign for Hailiang Education Group you should know about.

Although Hailiang Education Group 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.