If You Like EPS Growth Then Check Out BNK Banking (ASX:BBC) Before It's Too Late

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in BNK Banking (ASX:BBC). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

View our latest analysis for BNK Banking

How Fast Is BNK Banking Growing Its Earnings Per Share?

Over the last three years, BNK Banking has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that BNK Banking's EPS have grown from AU$0.052 to AU$0.061 over twelve months. That's a 19% gain; respectable growth in the broader scheme of things.

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. I note that BNK Banking'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 BNK Banking's EBIT margins were flat over the last year, revenue grew by a solid 15% to AU$35m. 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 BNK Banking is no giant, with a market capitalization of AU$71m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are BNK Banking Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own BNK Banking shares worth a considerable sum. To be specific, they have AU$17m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 24% of the company; visible skin in the game.

Does BNK Banking Deserve A Spot On Your Watchlist?

One positive for BNK Banking is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination sparks joy for me, so I'd consider keeping the company on a watchlist. However, before you get too excited we've discovered 3 warning signs for BNK Banking (1 is potentially serious!) that you should be aware of.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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This article by Simply Wall St is general in nature. 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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