We Ran A Stock Scan For Earnings Growth And TC Bancshares (NASDAQ:TCBC) Passed With Ease
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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 TC Bancshares (NASDAQ:TCBC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide TC Bancshares with the means to add long-term value to shareholders.
View our latest analysis for TC Bancshares
TC Bancshares' Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. TC Bancshares' EPS shot up from US$0.24 to US$0.31; a result that's bound to keep shareholders happy. That's a fantastic gain of 29%.
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 TC Bancshares' 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. EBIT margins for TC Bancshares remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 5.6% to US$16m. That's encouraging news for the company!
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
TC Bancshares isn't a huge company, given its market capitalisation of US$64m. That makes it extra important to check on its balance sheet strength.
Are TC Bancshares 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Not only did TC Bancshares insiders refrain from selling stock during the year, but they also spent US$131k buying it. That paints the company in a nice light, as it signals that its leaders are feeling confident in where the company is heading. It is also worth noting that it was Independent Director Charles Dixon who made the biggest single purchase, worth US$50k, paying US$13.95 per share.
Should You Add TC Bancshares To Your Watchlist?
For growth investors, TC Bancshares' raw rate of earnings growth is a beacon in the night. Growth in EPS isn't the only striking feature with company insiders adding to their holdings being another noteworthy vote of confidence for the company. So on this analysis, TC Bancshares is probably worth spending some time on. We should say that we've discovered 1 warning sign for TC Bancshares that you should be aware of before investing here.
Keen growth investors love to see insider buying. Thankfully, TC Bancshares isn't the only one. You can see a a free list of them here.
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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