Here’s why we think BII Railway Transportation Technology Holdings (HKG: 1522) is worth watching
Some have more money than common sense, they say, so even businesses with no income, no profit, and a record of failure can easily find investors. But as Peter Lynch put it in One Up on Wall Street, ‘Long shots hardly ever pay off.’
Contrary to all this, I prefer to spend time on companies like BII Railway Transportation Technology Holdings (HKG: 1522), which not only has income, but also profits. Now, I’m not saying the stock is necessarily undervalued today; but I cannot shake the appreciation of the profitability of the company itself. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when in a hurry.
Check out our latest review for BII Railway Transportation Technology Holdings
Improved profits of BII Railway Transportation Technology Holdings
In a capitalist society, capital runs after profits, which means that stock prices tend to rise with earnings per share (EPS). So like the hint of a smile on a face I love, growing EPS usually makes me look twice. So you can imagine that it almost struck me when I realized that BII Railway Transportation Technology Holdings had increased its EPS from HK $ 0.033 to HK $ 0.10, in a short year. When profits grow so quickly, it often means good things ahead for the business. Could this be a sign that the business has reached an inflection point?
A close look at revenue growth and profit before interest and tax (EBIT) margins can help shed light on the sustainability of recent earnings growth. The good news is that BII Railway Transportation Technology Holdings is increasing revenue and EBIT margins have improved 4.9 percentage points to 13% over the past year. It’s great to see, on both counts.
You can check out the revenue and profit growth trend of the company in the chart below. Click on the graph to see the exact numbers.
BII Railway Transportation Technology Holdings is not a large company considering its market capitalization of HK $ 1.1 billion. It is therefore very important to check the strength of its balance sheet.
Are BII Railway Transportation Technology Holdings Insiders Aligned With All Shareholders?
I feel more secure owning shares in a company if insiders also own shares, thereby aligning our interests more closely. Accordingly, I am encouraged by the fact that insiders own shares of BII Railway Transportation Technology Holdings of considerable value. Indeed, they hold HK $ 132 million of its shares. This shows strong buy-in and may indicate a belief in business strategy. This represents 12% of the company, demonstrating a high level of alignment with shareholders.
Does BII Railway Transportation Technology Holdings deserve a spot on your watchlist?
BII Railway Transportation Technology Holdings’ earnings per share growth levitated, like a mountain goat scaling the Alps. This BPA growth certainly has my attention, and the large insider ownership only serves to pique my interest further. Sometimes the rapid growth of BPA is a sign that the business has reached an inflection point; and I like those. So, in my opinion, BII Railway Transportation Technology Holdings deserves to be put on your watch list; after all, shareholders do well when the market underestimates fast-growing companies. You should always take note of the risks, for example – BII Railway Transportation Technology Holdings has 3 warning signs we think you should be aware.
You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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