Here's Why We Think Plumas Bancorp (NASDAQ:PLBC) Is Well Worth Watching
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. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Plumas Bancorp (NASDAQ:PLBC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Plumas Bancorp with the means to add long-term value to shareholders.
Check out our latest analysis for Plumas Bancorp
How Quickly Is Plumas Bancorp Increasing Earnings Per Share?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Over the last three years, Plumas Bancorp has grown EPS by 15% per year. That's a pretty good rate, if the company can sustain it.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. It's noted that Plumas Bancorp's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Plumas Bancorp achieved similar EBIT margins to last year, revenue grew by a solid 25% to US$68m. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Since Plumas Bancorp is no giant, with a market capitalisation of US$256m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Plumas Bancorp 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 Plumas Bancorp insiders have a significant amount of capital invested in the stock. Indeed, they hold US$21m worth of its stock. That's a lot of money, and no small incentive to work hard. That amounts to 8.0% of the company, demonstrating a degree of high-level alignment with shareholders.
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. The median total compensation for CEOs of companies similar in size to Plumas Bancorp, with market caps between US$100m and US$400m, is around US$1.6m.
Plumas Bancorp's CEO took home a total compensation package of US$614k in the year prior to December 2021. That looks like a modest pay packet, and may hint at a certain respect for the interests of 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. It can also be a sign of a culture of integrity, in a broader sense.
Is Plumas Bancorp Worth Keeping An Eye On?
One positive for Plumas Bancorp is that it is growing EPS. That's nice to see. The growth of EPS may be the eye-catching headline for Plumas Bancorp, 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. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Plumas Bancorp , and understanding it should be part of your investment process.
Although Plumas Bancorp 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.
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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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