With EPS Growth And More, Riverview Bancorp (NASDAQ:RVSB) Makes An Interesting Case
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Riverview Bancorp (NASDAQ:RVSB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Riverview Bancorp with the means to add long-term value to shareholders.
Check out our latest analysis for Riverview Bancorp
Riverview Bancorp's Earnings Per Share Are Growing
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years Riverview Bancorp grew its EPS by 6.2% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. It's noted that Riverview Bancorp's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. EBIT margins for Riverview Bancorp remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 16% to US$65m. That's progress.
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.
Riverview Bancorp isn't a huge company, given its market capitalisation of US$163m. That makes it extra important to check on its balance sheet strength.
Are Riverview Bancorp Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
A great takeaway for shareholders is that company insiders within Riverview Bancorp have collectively spent US$38k acquiring shares in the company. While this investment may be modest, it is great considering the lack of insider selling. It is also worth noting that it was Independent Director Stacey Graham who made the biggest single purchase, worth US$20k, paying US$7.36 per share.
Recent insider purchases of Riverview Bancorp stock is not the only way management has kept the interests of the general public shareholders in mind. To be specific, the CEO is paid modestly when compared to company peers of the same size. The median total compensation for CEOs of companies similar in size to Riverview Bancorp, with market caps between US$100m and US$400m, is around US$1.7m.
Riverview Bancorp offered total compensation worth US$950k to its CEO in the year to March 2022. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Does Riverview Bancorp Deserve A Spot On Your Watchlist?
As previously touched on, Riverview Bancorp is a growing business, which is encouraging. And there's more to Riverview Bancorp, with the insider buying and modest CEO pay being a great look for those with an eye on the company. The sum of all that, points to a quality business, and a genuine prospect for further research. We should say that we've discovered 3 warning signs for Riverview Bancorp (1 is potentially serious!) that you should be aware of before investing here.
The good news is that Riverview Bancorp is not the only growth stock with insider buying. Here's a list of them... 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.
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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.
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