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. 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 Hubei Feilihua Quartz Glass (SZSE:300395). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Hubei Feilihua Quartz Glass

How Quickly Is Hubei Feilihua Quartz Glass Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Shareholders will be happy to know that Hubei Feilihua Quartz Glass' EPS has grown 33% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.

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. It's noted that Hubei Feilihua Quartz Glass' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Hubei Feilihua Quartz Glass maintained stable EBIT margins over the last year, all while growing revenue 21% to CN¥1.9b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

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

Are Hubei Feilihua Quartz Glass Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Hubei Feilihua Quartz Glass insiders have a significant amount of capital invested in the stock. Notably, they have an enviable stake in the company, worth CN¥3.7b. That equates to 18% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.

Is Hubei Feilihua Quartz Glass Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Hubei Feilihua Quartz Glass' strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Hubei Feilihua Quartz Glass' continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. Of course, just because Hubei Feilihua Quartz Glass is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Although Hubei Feilihua Quartz Glass 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.

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.