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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Tianjin Pharmaceutical Da Ren Tang Group (SGX:T14). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Tianjin Pharmaceutical Da Ren Tang Group with the means to add long-term value to shareholders.

View our latest analysis for Tianjin Pharmaceutical Da Ren Tang Group

How Quickly Is Tianjin Pharmaceutical Da Ren Tang Group Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. It certainly is nice to see that Tianjin Pharmaceutical Da Ren Tang Group has managed to grow EPS by 23% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Tianjin Pharmaceutical Da Ren Tang Group achieved similar EBIT margins to last year, revenue grew by a solid 22% to CN¥8.6b. That's progress.

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.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Tianjin Pharmaceutical Da Ren Tang Group's future EPS 100% free.

Are Tianjin Pharmaceutical Da Ren Tang Group Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own Tianjin Pharmaceutical Da Ren Tang Group shares worth a considerable sum. Given insiders own a significant chunk of shares, currently valued at CN¥56m, they have plenty of motivation to push the business to succeed. That's certainly enough to let shareholders know that management will be very focussed on long term growth.

While it's always good to see some strong conviction in the company from insiders through heavy investment, it's also important for shareholders to ask if management compensation policies are reasonable. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between CN¥15b and CN¥47b, like Tianjin Pharmaceutical Da Ren Tang Group, the median CEO pay is around CN¥13m.

Tianjin Pharmaceutical Da Ren Tang Group's CEO took home a total compensation package of CN¥1.1m in the year prior to December 2022. 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.

Does Tianjin Pharmaceutical Da Ren Tang Group Deserve A Spot On Your Watchlist?

You can't deny that Tianjin Pharmaceutical Da Ren Tang Group has grown its earnings per share at a very impressive rate. That's attractive. If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. Everyone has their own preferences when it comes to investing but it definitely makes Tianjin Pharmaceutical Da Ren Tang Group look rather interesting indeed. Still, you should learn about the 1 warning sign we've spotted with Tianjin Pharmaceutical Da Ren Tang Group.

Although Tianjin Pharmaceutical Da Ren Tang Group 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.