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If You Like EPS Growth Then Check Out Peapack-Gladstone Financial (NASDAQ:PGC) Before It's Too Late

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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Peapack-Gladstone Financial (NASDAQ:PGC), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. 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.

View our latest analysis for Peapack-Gladstone Financial

Peapack-Gladstone Financial'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 share price follows earnings per share (EPS) eventually. It's no surprise, then, that I like to invest in companies with EPS growth. Impressively, Peapack-Gladstone Financial has grown EPS by 21% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

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 Peapack-Gladstone Financial'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. Peapack-Gladstone Financial maintained stable EBIT margins over the last year, all while growing revenue 7.4% to US$157m. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

NasdaqGS:PGC Income Statement, May 13th 2019
NasdaqGS:PGC Income Statement, May 13th 2019

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Peapack-Gladstone Financial.

Are Peapack-Gladstone Financial Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did Peapack-Gladstone Financial insiders refrain from selling stock during the year, but they also spent US$131k buying it. That's nice to see, because it suggests insiders are optimistic. We also note that it was the Senior EVP & CFO, Jeffrey Carfora, who made the biggest single acquisition, paying US$42k for shares at about US$28.21 each.

On top of the insider buying, it's good to see that Peapack-Gladstone Financial insiders have a valuable investment in the business. With a whopping US$53m worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 10.0% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Does Peapack-Gladstone Financial Deserve A Spot On Your Watchlist?

You can't deny that Peapack-Gladstone Financial has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant stake in the company and have been buying more shares. So it's fair to say I think this stock may well deserve a spot on your watchlist. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusive discounted cashflow valuation of Peapack-Gladstone Financial. You might benefit from giving it a glance today.

As a growth investor I do like to see insider buying. But Peapack-Gladstone Financial isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction

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.

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. Thank you for reading.