Should You Be Adding Bank of the James Financial Group (NASDAQ:BOTJ) To Your Watchlist Today?
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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
In contrast to all that, I prefer to spend time on companies like Bank of the James Financial Group (NASDAQ:BOTJ), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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.
See our latest analysis for Bank of the James Financial Group
Bank of the James Financial Group's Earnings Per Share Are Growing.
If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Bank of the James Financial Group has grown EPS by 22% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that Bank of the James Financial Group's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Bank of the James Financial Group maintained stable EBIT margins over the last year, all while growing revenue 19% to US$38m. That's progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
Since Bank of the James Financial Group is no giant, with a market capitalization of US$76m, so you should definitely check its cash and debt before getting too excited about its prospects.
Are Bank of the James Financial Group Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
It's good to see Bank of the James Financial Group insiders walking the walk, by spending US$314k on shares in just twelve months. And when you consider that there was no insider selling, you can understand why shareholders might believe that lady luck will grace this business. We also note that it was the Independent Director, Watt Foster, who made the biggest single acquisition, paying US$169k for shares at about US$14.00 each.
Should You Add Bank of the James Financial Group To Your Watchlist?
For growth investors like me, Bank of the James Financial Group's raw rate of earnings growth is a beacon in the night. The growth rate whets my appetite for research, and the insider buying only increases my interest in the stock. So on this analysis I believe Bank of the James Financial Group is probably worth spending some time on. You should always think about risks though. Case in point, we've spotted 2 warning signs for Bank of the James Financial Group you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Bank of the James Financial Group, you'll probably love this free list of growing companies that insiders are buying.
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.
