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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.

In contrast to all that, many investors prefer to focus on companies like Anhui Guangxin Agrochemical (SHSE:603599), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Anhui Guangxin Agrochemical

How Fast Is Anhui Guangxin Agrochemical Growing Its Earnings Per Share?

Over the last three years, Anhui Guangxin Agrochemical has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, Anhui Guangxin Agrochemical's EPS shot from CN¥1.83 to CN¥3.55, over the last year. It's a rarity to see 94% year-on-year growth like that. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.

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. Anhui Guangxin Agrochemical shareholders can take confidence from the fact that EBIT margins are up from 25% to 31%, and revenue is growing. 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. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Anhui Guangxin Agrochemical's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Anhui Guangxin Agrochemical Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Anhui Guangxin Agrochemical shares worth a considerable sum. Indeed, they have a considerable amount of wealth invested in it, currently valued at CN¥1.1b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

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. Our analysis has discovered that the median total compensation for the CEOs of companies like Anhui Guangxin Agrochemical with market caps between CN¥14b and CN¥45b is about CN¥1.3m.

The Anhui Guangxin Agrochemical CEO received total compensation of only CN¥397k in the year to December 2021. This total may indicate that the CEO is sacrificing take home pay for performance-based benefits, ensuring that their motivations are synonymous with strong company results. 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 good governance, more generally.

Does Anhui Guangxin Agrochemical Deserve A Spot On Your Watchlist?

Anhui Guangxin Agrochemical's earnings have taken off in quite an impressive fashion. The cherry on top is that insiders own a bucket-load of shares, and the CEO pay seems really quite reasonable. The strong EPS improvement suggests the businesses is humming along. Anhui Guangxin Agrochemical certainly ticks a few boxes, so we think it's probably well worth further consideration. Even so, be aware that Anhui Guangxin Agrochemical is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

Although Anhui Guangxin Agrochemical certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.