It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Jiutian Chemical Group (Catalist:C8R). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jiutian Chemical Group with the means to add long-term value to shareholders.
Check out our latest analysis for Jiutian Chemical Group
How Fast Is Jiutian Chemical Group Growing Its Earnings Per Share?
In the last three years Jiutian Chemical Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Jiutian Chemical Group's EPS catapulted from CN¥0.15 to CN¥0.28, over the last year. It's a rarity to see 79% year-on-year growth like that. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.
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. Jiutian Chemical Group shareholders can take confidence from the fact that EBIT margins are up from 27% to 32%, and revenue is growing. That's great to see, on both counts.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Jiutian Chemical Group?
Are Jiutian Chemical Group Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Jiutian Chemical Group top brass are certainly in sync, not having sold any shares, over the last year. But more importantly, Executive Director Chee Seng Lee spent CN¥219k acquiring shares, doing so at an average price of CN¥0.073. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.