Is it time to put Aluminum Corporation of China (HKG:2600) on your watch list?
It is common for many investors, especially those who are inexperienced, to buy shares in companies that have a good history, even if those companies are loss-making. Sometimes these stories can cloud investors’ minds, leading them to invest with their emotions rather than on the merit of good company fundamentals. Although a well-funded business may suffer losses for years, it will eventually have to turn a profit or investors will move on and the business will wither away.
So if this idea of high risk and high reward doesn’t sit well with you, you might be more interested in profitable and growing businesses, like China Aluminum Company (HKG:2600). While that doesn’t necessarily mean it’s undervalued, the company’s profitability is enough to warrant some appreciation, especially if it’s growing.
Check out our latest analysis for Aluminum Corporation of China
How fast is Aluminum Corporation of China growing earnings per share?
Strong earnings per share (EPS) results are an indicator of a company making strong earnings, which investors view favorably and therefore the stock price tends to reflect excellent EPS performance. Thus, a growing EPS generally draws attention to a company in the eyes of potential investors. It is impressive that the EPS of Aluminum Corporation of China has gone from CN¥0.082 to CN¥0.32 in just one year. While sustaining growth at this level is difficult, it bodes well for the company’s future prospects. This could indicate that the business is reaching an inflection point.
It is often useful to look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another idea of the quality of the company’s growth. The good news is that Aluminum Corporation of China is increasing its revenue and EBIT margins have improved by 2.2 percentage points to 6.6% compared to last year. These are two great indicators to check for potential growth.
In the table below, you can see how the company has increased its profits and revenue over time. To see the actual numbers, click on the chart.
As we live in the moment, there is no doubt that the future matters most in the investment decision process. So why not check out this interactive chart outlining future EPS estimates, for Aluminum Corporation of China?
Are Aluminum Corporation of China insiders aligned with all shareholders?
Due to the size of Aluminum Corporation of China, we would not expect insiders to own a significant share of the business. But we are reassured by the fact that they have invested in the company. Owning shares worth 485 million Canadian yen in the company is no joke and insiders will be committed to delivering the best results for shareholders. This should keep them focused on creating long-term shareholder value.
While it’s always good to see strong belief in the company from insiders through heavy investment, it’s also important for shareholders to consider whether executive compensation policies are reasonable. Well, based on CEO compensation, you’d say they indeed are. Our analysis found that the median total compensation for CEOs of companies like Aluminum Corporation of China, with market capitalizations above 54 billion yen, is around 6.7 million yen.
The CEO of Aluminum Corporation of China received a total compensation of only 1.3 million cinematic yen in the year to December 2021. This looks like a modest salary and may hint at some respect for interests shareholders. CEO compensation isn’t the most important aspect of a company to consider, but when it’s reasonable, it gives a little more confidence that executives are looking after shareholders’ interests. It can also be a sign of good governance more generally.
Is Aluminum Corporation of China worth watching?
Aluminum Corporation of China’s earnings per share growth increased at an appreciable pace. An added bonus for those interested is that the management owns a bunch of stock and the CEO compensation is quite reasonable, illustrating good cash management. The sharp rise in earnings could signal good business momentum. Big growth can make big winners, so the writing on the wall tells us that Aluminum Corporation of China deserves careful consideration. It should be noted, however, that we found 3 warning signs for Aluminum Corporation of China that you need to consider.
Although Aluminum Corporation of China certainly looks good, it could attract more investors if insiders buy shares. If you like seeing insiders buy, then this free list of growing companies that insiders are buying might be exactly what you are looking for.
Please note that insider trading discussed in this article refers to reportable trading 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 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.