Is Now The Time To Put Heartland Financial USA (NASDAQ:HTLF) On Your Watchlist?
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 currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Heartland Financial USA (NASDAQ:HTLF). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out our latest analysis for Heartland Financial USA
How Quickly Is Heartland Financial USA Increasing Earnings Per Share?
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Heartland Financial USA grew its EPS by 10% per year. That's a pretty good rate, if the company can sustain it.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. It's noted that Heartland Financial USA's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. EBIT margins for Heartland Financial USA remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 3.3% to US$719m. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Heartland Financial USA's future EPS 100% free.
Are Heartland Financial USA Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
We do note that Heartland Financial USA insiders netted US$201k worth of shares over the last year. On the other hand, President Bruce Lee paid US$230k for shares, at a price of about US$32.79 per share. Overall, that is something good to take away.
Along with the insider buying, another encouraging sign for Heartland Financial USA is that insiders, as a group, have a considerable shareholding. Notably, they have an enviable stake in the company, worth US$122m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Bruce Lee is paid comparatively modestly to CEOs at similar sized companies. The median total compensation for CEOs of companies similar in size to Heartland Financial USA, with market caps between US$1.0b and US$3.2b, is around US$5.1m.
The Heartland Financial USA CEO received US$3.1m in compensation for the year ending December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.
Is Heartland Financial USA Worth Keeping An Eye On?
One positive for Heartland Financial USA is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. What about risks? Every company has them, and we've spotted 2 warning signs for Heartland Financial USA (of which 1 is a bit concerning!) you should know about.
The good news is that Heartland Financial USA 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.
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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