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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. 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 Weichai Power (HKG:2338). 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. 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 Weichai Power
How Fast Is Weichai Power Growing Its Earnings Per Share?
Over the last three years, Weichai Power 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. Weichai Power boosted its trailing twelve month EPS from CN¥1.02 to CN¥1.22, in the last year. I doubt many would complain about that 20% 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. While we note Weichai Power's EBIT margins were flat over the last year, revenue grew by a solid 6.1% to CN¥168b. That's a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Weichai Power's future profits.
Are Weichai Power Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a HK$130b company like Weichai Power. But we are reassured by the fact they have invested in the company. Notably, they have an enormous stake in the company, worth CN¥1.8b. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, I'd say they are indeed. I discovered that the median total compensation for the CEOs of companies like Weichai Power, with market caps over CN¥56b, is about CN¥7.4m.