Here's Why Peoples Bancorp of North Carolina (NASDAQ:PEBK) Has Caught The Eye Of Investors
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Peoples Bancorp of North Carolina (NASDAQ:PEBK). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
Check out our latest analysis for Peoples Bancorp of North Carolina
How Fast Is Peoples Bancorp of North Carolina Growing Its Earnings Per Share?
Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's easy to see why many investors focus in on EPS growth. In previous twelve months, Peoples Bancorp of North Carolina's EPS has risen from US$2.50 to US$2.66. That's a fair increase of 6.1%.
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. Not all of Peoples Bancorp of North Carolina's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. While we note Peoples Bancorp of North Carolina achieved similar EBIT margins to last year, revenue grew by a solid 7.9% to US$74m. That's a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
Peoples Bancorp of North Carolina isn't a huge company, given its market capitalisation of US$184m. That makes it extra important to check on its balance sheet strength.
Are Peoples Bancorp of North Carolina Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Peoples Bancorp of North Carolina insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at US$24m. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 13% of the shares on issue for the business, an appreciable amount considering the market cap.
It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between US$100m and US$400m, like Peoples Bancorp of North Carolina, the median CEO pay is around US$1.7m.
The Peoples Bancorp of North Carolina CEO received total compensation of just US$581k in the year to December 2021. First impressions seem to indicate a compensation policy that is favourable to shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Does Peoples Bancorp of North Carolina Deserve A Spot On Your Watchlist?
As previously touched on, Peoples Bancorp of North Carolina is a growing business, which is encouraging. The growth of EPS may be the eye-catching headline for Peoples Bancorp of North Carolina, but there's more to bring joy for shareholders. With company insiders aligning themselves considerably with the company's success and modest CEO compensation, there's no arguments that this is a stock worth looking into. You should always think about risks though. Case in point, we've spotted 2 warning signs for Peoples Bancorp of North Carolina you should be aware of.
Although Peoples Bancorp of North Carolina certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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