It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Bank of the James Financial Group (NASDAQ:BOTJ). While profit is not necessarily a social good, it’s easy to admire a business than 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.
How Quickly Is Bank of the James Financial Group Increasing Earnings Per Share?
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That makes EPS growth an attractive quality for any company. Over the last three years, Bank of the James Financial Group has grown EPS by 9.8% per year. That’s a good rate of growth, if it can be sustained.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth. I note that Bank of the James Financial Group’s revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note Bank of the James Financial Group’s EBIT margins were flat over the last year, revenue grew by a solid 11% to US$29m. That’s progress.
Bank of the James Financial Group isn’t a huge company, given its market capitalization of US$65m. That makes it extra important to check on its balance sheet strength.
Are Bank of the James Financial Group 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. 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.
Any way you look at it Bank of the James Financial Group shareholders can gain quiet confidence from the fact that insiders shelled out US$332k to buy stock, over the last year. And when you consider that there was no insider selling, you can understand why shareholders might believe that lady luck will grace this business. Zooming in, we can see that the biggest insider purchase was by Lydia Langley for US$108k worth of shares, at about US$14.30 per share.
Is Bank of the James Financial Group Worth Keeping An Eye On?
One important encouraging feature of Bank of the James Financial Group is that it is growing profits. While some companies are struggling to grow EPS, Bank of the James Financial Group seems free from that morose affliction. The gravy on the mushroom pie is the insider buying, which has me tasting potential opportunity; one for the watchlist, I’d posit. While we’ve looked at the quality of the earnings, we haven’t yet done any work to value the stock. So if you like to buy cheap, you may want to check if Bank of the James Financial Group is trading on a high P/E or a low P/E, relative to its industry.
The good news is that Bank of the James Financial Group 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
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