Is it time to put Greentown Management Holdings (HKG:9979) on your watch list?

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For starters, it might seem like a good idea (and an exciting prospect) to buy a company that tells investors a good story, even if it completely lacks a track record of revenue and earnings. Unfortunately, high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson.

If, on the other hand, you like businesses that generate revenue and even profit, then you might be interested in Greentown Management Holdings (HKG:9979). Although profit is not necessarily a social good, it is easy to admire a company that can produce it consistently. While a well-funded business may suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to turn a profit, or else breathe its last breath.

Check out our latest analysis for Greentown Management Holdings

How fast is Greentown Management Holdings growing earnings per share?

If a company can keep increasing its earnings per share (EPS) long enough, its stock price will eventually follow. This means EPS growth is seen as a real benefit by most successful long-term investors. Greentown Management Holdings succeeded in increasing EPS by 7.5% per year, over three years. This may not be particularly high growth, but it shows that earnings per share are steadily moving in the right direction.

One way to check a company’s growth is to look at the evolution of its revenues and its earnings before interest and taxes (EBIT) margins. While we note that Greentown Management Holdings’ EBIT margins have remained stable over the past year, revenues have increased 24% to 2.2 billion yen. This is a real plus point.

In the table below, you can see how the company has increased its profits and revenue over time. Click on the table to see the exact numbers.

SEHK: 9979 Earnings & Revenue History June 13, 2022

Luckily, we have access to analyst forecasts from Greentown Management Holdings coming profits. You can make your own predictions without looking, or you can take a peek at what the pros are predicting.

Are Greentown Management Holdings insiders aligned with all shareholders?

Like that fresh smell in the air when the rains come, insider buying fills me with hopeful anticipation. Indeed, insider buying often indicates that those closest to the company are confident that the stock price will perform well. However, small purchases don’t always reveal conviction, and insiders don’t always get it right.

The first piece of good news is that no Greentown Management Holdings insider has reported any stock sales in the past twelve months. But the really good news is that CEO and Executive Director Jun Li spent 6.2 million Canadian yen to buy shares, at an average price of around 4.91 domestic yen. Big purchases like that give me a sense of opportunity; Action speaks louder than words.

Besides insider buying, another encouraging sign for Greentown Management Holdings is that insiders, as a group, hold a significant stake. Indeed, they hold 100 million yen of its stock. It shows strong buy-in and can indicate belief in the business strategy. Although it represents only 1.0% of the company, the value of this investment is enough to show that insiders have a lot to do with the company.

Should you add Greentown Management Holdings to your watchlist?

An important and encouraging feature of Greentown Management Holdings is that it increases its profits. On top of that, we’ve seen insiders buy stocks even if they already have a lot. That makes the company a prime candidate for my watchlist — and arguably a search priority. We don’t want to rain too much on the parade, but we also found 2 warning signs for Greentown Management Holdings which you must take into account.

The good news is that Greentown Management Holdings isn’t the only growth stock to buy insiders. Here’s a list…with insider purchases over the past three months!

Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.


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