Is Now The Time To Put Ohio Valley Banc (NASDAQ:OVBC) On Your Watchlist?
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Ohio Valley Banc (NASDAQ:OVBC), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Ohio Valley Banc with the means to add long-term value to shareholders.
View our latest analysis for Ohio Valley Banc
How Fast Is Ohio Valley Banc Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Impressively, Ohio Valley Banc has grown EPS by 17% 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 beaming.
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. Our analysis has highlighted that Ohio Valley Banc's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. Ohio Valley Banc maintained stable EBIT margins over the last year, all while growing revenue 9.0% to US$57m. That's progress.
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.
Since Ohio Valley Banc is no giant, with a market capitalisation of US$115m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Ohio Valley Banc Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
One positive for Ohio Valley Banc, is that company insiders spent US$6.1k acquiring shares in the last year. While this investment may be modest, it is great considering the lack of insider selling.
The good news, alongside the insider buying, for Ohio Valley Banc bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at US$15m. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 13% of the company, demonstrating a degree of high-level alignment with shareholders.
While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because Ohio Valley Banc's CEO, Larry Miller, is paid at a relatively modest level when compared to other CEOs for companies of this size. For companies with market capitalisations under US$200m, like Ohio Valley Banc, the median CEO pay is around US$763k.
Ohio Valley Banc offered total compensation worth US$623k to its CEO in the year to December 2022. That is actually below the median for CEO's of similarly sized companies. 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 good governance, more generally.
Is Ohio Valley Banc Worth Keeping An Eye On?
You can't deny that Ohio Valley Banc has grown its earnings per share at a very impressive rate. That's attractive. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. Astute investors will want to keep this stock on watch. Now, you could try to make up your mind on Ohio Valley Banc by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Ohio Valley Banc, you'll probably love this free list of growing companies that insiders are buying.
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.
