If EPS Growth Is Important To You, Yangzijiang Shipbuilding (Holdings) (SGX:BS6) Presents An Opportunity

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.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Yangzijiang Shipbuilding (Holdings) (SGX:BS6). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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Yangzijiang Shipbuilding (Holdings)'s Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Yangzijiang Shipbuilding (Holdings)'s shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 50%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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 Yangzijiang Shipbuilding (Holdings) is growing revenues, and EBIT margins improved by 5.8 percentage points to 30%, over the last year. Both of which are great metrics to check off for potential growth.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

View our latest analysis for Yangzijiang Shipbuilding (Holdings)

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 Yangzijiang Shipbuilding (Holdings)'s future profits.

Are Yangzijiang Shipbuilding (Holdings) Insiders Aligned With All Shareholders?

Owing to the size of Yangzijiang Shipbuilding (Holdings), we wouldn't expect insiders to hold a significant proportion of the company. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. Indeed, they have a considerable amount of wealth invested in it, currently valued at CN¥601m. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. The median total compensation for CEOs of companies similar in size to Yangzijiang Shipbuilding (Holdings), with market caps over CN¥56b, is around CN¥37m.

The CEO of Yangzijiang Shipbuilding (Holdings) only received CN¥6.0m in total compensation for the year ending December 2024. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Yangzijiang Shipbuilding (Holdings) To Your Watchlist?

Yangzijiang Shipbuilding (Holdings)'s earnings have taken off in quite an impressive fashion. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The sharp increase in earnings could signal good business momentum. Yangzijiang Shipbuilding (Holdings) is certainly doing some things right and is well worth investigating. We should say that we've discovered 1 warning sign for Yangzijiang Shipbuilding (Holdings) that you should be aware of before investing here.

Although Yangzijiang Shipbuilding (Holdings) certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Singaporean companies that not only boast of strong growth but have strong insider backing.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.