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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in China Merchants Expressway Network & Technology HoldingsLtd (SZSE:001965). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide China Merchants Expressway Network & Technology HoldingsLtd with the means to add long-term value to shareholders.

How Quickly Is China Merchants Expressway Network & Technology HoldingsLtd Increasing Earnings Per Share?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, China Merchants Expressway Network & Technology HoldingsLtd has grown EPS by 14% per year. That growth rate is fairly good, assuming the company can keep it up.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. China Merchants Expressway Network & Technology HoldingsLtd maintained stable EBIT margins over the last year, all while growing revenue 25% to CN¥11b. 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.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for China Merchants Expressway Network & Technology HoldingsLtd's future profits.

Are China Merchants Expressway Network & Technology HoldingsLtd 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 over CN¥58b, like China Merchants Expressway Network & Technology HoldingsLtd, the median CEO pay is around CN¥3.0m.

China Merchants Expressway Network & Technology HoldingsLtd offered total compensation worth CN¥1.8m to its CEO in the year to December 2023. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add China Merchants Expressway Network & Technology HoldingsLtd To Your Watchlist?

As previously touched on, China Merchants Expressway Network & Technology HoldingsLtd is a growing business, which is encouraging. To add to this, the modest CEO compensation should tell investors that the directors have an active interest in delivering the best for shareholders. So all in all China Merchants Expressway Network & Technology HoldingsLtd is worthy at least considering for your watchlist. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for China Merchants Expressway Network & Technology HoldingsLtd (1 is potentially serious) you should be aware of.

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