If You Like EPS Growth Then Check Out China Tian Lun Gas Holdings (HKG:1600) Before It’s Too Late

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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily 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. If, on the other…

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily 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.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in China Tian Lun Gas Holdings (HKG:1600).Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself.While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
View our latest analysis for China Tian Lun Gas Holdings
How Fast Is China Tian Lun Gas Holdings Growing? 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).Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS.Who among us would not applaud China Tian Lun Gas Holdings’s stratospheric annual EPS growth of 38%, compound, over the last three years? That sort of growth never lasts long, but like a shooting star it is well worth watching when it happens.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats).China Tian Lun Gas Holdings shareholders can take confidence from the fact that EBIT margins are up from 21% to 24%, and revenue is growing.

Ticking those two boxes is a good sign of growth, in my book.
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.
Of course the knack is to find stocks that have their best days in the future, not in the past.You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for China Tian Lun Gas Holdings.
Are China Tian Lun Gas Holdings Insiders Aligned With All Shareholders? I like company leaders to have some skin in the game, 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 China Tian Lun Gas Holdings insiders have a significant amount of capital invested in the stock.Indeed, they have a glittering mountain of wealth invested in it, currently valued at CN¥1.0b.Coming in at 15% of the business, that holding gives insiders a lot of influence, and plenty of reason to generate value for shareholders.Very encouraging.
It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly.A brief analysis of the CEO compensation suggests they are.For companies with market capitalizations between CN¥2.8b and CN¥11b, like China Tian Lun Gas Holdings, the median CEO pay is around CN¥3.3m.
The CEO of China Tian Lun Gas Holdings only received CN¥661k in total compensation for the year ending December 2018.

That’s clearly well below average, so at a glance, that arrangement seems generous to shareholders, and points to a modest remuneration culture.While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind.I’d also argue reasonable pay levels attest to good decision making more generally.
Is China Tian Lun Gas Holdings Worth Keeping An Eye On? China Tian Lun Gas Holdings’s earnings have taken off like any random crypto-currency did, back in 2017.The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable.The sharp increase in earnings could signal good business momentum.

Big growth can make big winners, so I do think China Tian Lun Gas Holdings is worth considering carefully.While we’ve looked at the quality of the earnings, we haven’t yet done any work to value the stock.So if you like to buy cheap, you may want to check if China Tian Lun Gas Holdings is trading on a high P/E or a low P/E, relative to its industry.
You can invest in any company you want.

But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
If you spot an error that warrants correction, please contact the editor at [email protected] .This article by Simply Wall St is general in nature.It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation.Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data.Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.Thank you for reading..

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