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 as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

So if you're like me, you might be more interested in profitable, growing companies, like Zhejiang Entive Smart Kitchen Appliance (SZSE:300911). 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.  While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Zhejiang Entive Smart Kitchen Appliance

How Fast Is Zhejiang Entive Smart Kitchen Appliance 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.   Impressively, Zhejiang Entive Smart Kitchen Appliance has grown EPS by 27% per year, compound, in the last three years.   As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.

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 Zhejiang Entive Smart Kitchen Appliance did well to grow revenue over the last year, EBIT margins were dampened at the same time.  So it seems the future my hold further growth, especially if EBIT margins can stabilize.

You can take a look at the company's revenue and earnings growth trend, in the chart below.  Click on the chart to see the exact numbers.

SZSE:300911 Earnings and Revenue History May 6th 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future Zhejiang Entive Smart Kitchen Appliance EPS 100% free.

Are Zhejiang Entive Smart Kitchen Appliance Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners.  As a result, I'm encouraged by the fact that insiders own Zhejiang Entive Smart Kitchen Appliance shares worth a considerable sum.     Given insiders own a small fortune of shares, currently valued at CN¥636m, they have plenty of motivation to push the business to succeed.   At 8.8% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Should You Add Zhejiang Entive Smart Kitchen Appliance To Your Watchlist?

Given my belief that share price follows earnings per share you can easily imagine how I feel about Zhejiang Entive Smart Kitchen Appliance's strong EPS growth.   Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth.  So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value.     Don't forget that there may still be risks. For instance, we've identified   2 warning signs for Zhejiang Entive Smart Kitchen Appliance  that you should be aware of.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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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.