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.

Does Jiutian Chemical Group Deserve A Spot On Your Watchlist?

Jiutian Chemical Group's earnings have taken off in quite an impressive fashion. Most growth-seeking investors will find it hard to ignore that sort of explosive EPS growth. And indeed, it could be a sign that the business is at an inflection point. If this these factors intrigue you, then an addition of Jiutian Chemical Group to your watchlist won't go amiss. You should always think about risks though. Case in point, we've spotted 2 warning signs for Jiutian Chemical Group you should be aware of, and 1 of them can't be ignored.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Jiutian Chemical Group, you'll probably love this free list of growing companies that insiders are buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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