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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like COSCO SHIPPING Specialized CarriersLtd (SHSE:600428). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

How Fast Is COSCO SHIPPING Specialized CarriersLtd Growing Its Earnings Per Share?

In the last three years COSCO SHIPPING Specialized CarriersLtd'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. So it would be better to isolate the growth rate over the last year for our analysis. COSCO SHIPPING Specialized CarriersLtd boosted its trailing twelve month EPS from CN¥0.42 to CN¥0.47, in the last year. That's a 13% gain; respectable growth in the broader scheme of things.

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. It's noted that COSCO SHIPPING Specialized CarriersLtd's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. EBIT margins have declined for COSCO SHIPPING Specialized CarriersLtd, but revenue stability should provide some reassurance to shareholders. While some people may not be too phased, this could be a sticking point for some investors.

The chart below shows how the company's bottom and top lines have progressed over time. 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 COSCO SHIPPING Specialized CarriersLtd's future EPS 100% free.

Are COSCO SHIPPING Specialized CarriersLtd Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalisations between CN¥7.3b and CN¥23b, like COSCO SHIPPING Specialized CarriersLtd, the median CEO pay is around CN¥1.3m.

COSCO SHIPPING Specialized CarriersLtd offered total compensation worth CN¥688k to its CEO in the year to December 2023. That is actually below the median for CEO's of similarly sized companies. 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.

Is COSCO SHIPPING Specialized CarriersLtd Worth Keeping An Eye On?

One important encouraging feature of COSCO SHIPPING Specialized CarriersLtd is that it is growing profits. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. All things considered, COSCO SHIPPING Specialized CarriersLtd is definitely worth taking a deeper dive into. What about risks? Every company has them, and we've spotted 3 warning signs for COSCO SHIPPING Specialized CarriersLtd you should know about.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CN with promising growth potential and insider confidence.

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.

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