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Here's Why I Think Metropolitan Bank Holding (NYSE:MCB) Might Deserve Your Attention Today

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·4 min read
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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. 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 Metropolitan Bank Holding (NYSE:MCB), which has not only revenues, but also profits. 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 Metropolitan Bank Holding

Metropolitan Bank Holding's Earnings Per Share Are Growing.

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Metropolitan Bank Holding has grown EPS by 26% 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.

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. I note that Metropolitan Bank Holding's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Metropolitan Bank Holding maintained stable EBIT margins over the last year, all while growing revenue 27% to US$132m. 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.

earnings-and-revenue-history
earnings-and-revenue-history

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Metropolitan Bank Holding?

Are Metropolitan Bank Holding Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. 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.

Insiders both bought and sold Metropolitan Bank Holding shares in the last year, but the good news is they spent US$21k more buying than they netted selling. When you weigh that up, it is a mild positive, indicating increased alignment between shareholders and management. Zooming in, we can see that the biggest insider purchase was by Independent Chairman of the Board William Reinhardt for US$34k worth of shares, at about US$24.36 per share.

Along with the insider buying, another encouraging sign for Metropolitan Bank Holding is that insiders, as a group, have a considerable shareholding. Indeed, they hold US$23m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 6.0% of the company; visible skin in the game.

Should You Add Metropolitan Bank Holding To Your Watchlist?

You can't deny that Metropolitan Bank Holding 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 I do think this is one stock worth watching. You should always think about risks though. Case in point, we've spotted 1 warning sign for Metropolitan Bank Holding you should be aware of.

The good news is that Metropolitan Bank Holding 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.