Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 ShenZhen Woer Heat-Shrinkable MaterialLtd (SZSE:002130), 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 ShenZhen Woer Heat-Shrinkable MaterialLtd with the means to add long-term value to shareholders.

ShenZhen Woer Heat-Shrinkable MaterialLtd's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Impressively, ShenZhen Woer Heat-Shrinkable MaterialLtd has grown EPS by 18% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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. Not all of ShenZhen Woer Heat-Shrinkable MaterialLtd's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. ShenZhen Woer Heat-Shrinkable MaterialLtd shareholders can take confidence from the fact that EBIT margins are up from 14% to 17%, 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. Click on the chart to see the exact numbers.

Fortunately, we've got access to analyst forecasts of ShenZhen Woer Heat-Shrinkable MaterialLtd's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are ShenZhen Woer Heat-Shrinkable MaterialLtd 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. So it is good to see that ShenZhen Woer Heat-Shrinkable MaterialLtd insiders have a significant amount of capital invested in the stock. We note that their impressive stake in the company is worth CN¥2.2b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Does ShenZhen Woer Heat-Shrinkable MaterialLtd Deserve A Spot On Your Watchlist?

For growth investors, ShenZhen Woer Heat-Shrinkable MaterialLtd's raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in ShenZhen Woer Heat-Shrinkable MaterialLtd's continuing strength. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. However, before you get too excited we've discovered 2 warning signs for ShenZhen Woer Heat-Shrinkable MaterialLtd that you should be aware of.

Although ShenZhen Woer Heat-Shrinkable MaterialLtd certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Chinese companies that not only boast of strong growth but have strong insider backing.

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.