The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Zhejiang Jiuzhou Pharmaceutical (SHSE:603456), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Zhejiang Jiuzhou Pharmaceutical with the means to add long-term value to shareholders.

See our latest analysis for Zhejiang Jiuzhou Pharmaceutical

How Fast Is Zhejiang Jiuzhou Pharmaceutical Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Zhejiang Jiuzhou Pharmaceutical's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 59%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. It's noted that Zhejiang Jiuzhou Pharmaceutical's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Zhejiang Jiuzhou Pharmaceutical maintained stable EBIT margins over the last year, all while growing revenue 39% to CN¥5.4b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Zhejiang Jiuzhou Pharmaceutical.

Are Zhejiang Jiuzhou Pharmaceutical Insiders Aligned With All Shareholders?

Owing to the size of Zhejiang Jiuzhou Pharmaceutical, 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. We note that their impressive stake in the company is worth CN¥3.0b. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Should You Add Zhejiang Jiuzhou Pharmaceutical To Your Watchlist?

Zhejiang Jiuzhou Pharmaceutical's earnings per share have been soaring, with growth rates sky high. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So at the surface level, Zhejiang Jiuzhou Pharmaceutical is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that Zhejiang Jiuzhou Pharmaceutical is showing 2 warning signs in our investment analysis , you should know about...

The beauty of investing is that you can invest in almost 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.