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If You Like EPS Growth Then Check Out Oppenheimer Holdings (NYSE:OPY) Before It's Too Late

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. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

So if you're like me, you might be more interested in profitable, growing companies, like Oppenheimer Holdings (NYSE:OPY). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

Check out our latest analysis for Oppenheimer Holdings

Oppenheimer Holdings's Improving Profits

In the last three years Oppenheimer Holdings's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Oppenheimer Holdings's EPS shot from US$2.18 to US$4.10, over the last year. Year on year growth of 88% is certainly a sight to behold.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Not all of Oppenheimer Holdings's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. Oppenheimer Holdings maintained stable EBIT margins over the last year, all while growing revenue 8.3% to US$988m. That's a real positive.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

NYSE:OPY Income Statement, March 18th 2020
NYSE:OPY Income Statement, March 18th 2020

Oppenheimer Holdings isn't a huge company, given its market capitalization of US$245m. That makes it extra important to check on its balance sheet strength.

Are Oppenheimer Holdings Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Oppenheimer Holdings insiders have a significant amount of capital invested in the stock. With a whopping US$67m worth of shares as a group, insiders have plenty riding on the company's success. At 28% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Does Oppenheimer Holdings Deserve A Spot On Your Watchlist?

Oppenheimer Holdings's earnings have taken off like any random crypto-currency did, back in 2017. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it's worth considering Oppenheimer Holdings for a spot on your watchlist. Before you take the next step you should know about the 1 warning sign for Oppenheimer Holdings that we have uncovered.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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