Stock Analysis

Do BOK Financial's (NASDAQ:BOKF) Earnings Warrant Your Attention?

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NasdaqGS:BOKF
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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.

So if you're like me, you might be more interested in profitable, growing companies, like BOK Financial (NASDAQ:BOKF). While profit is not necessarily a social good, it's easy to admire a business that 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.

See our latest analysis for BOK Financial

BOK Financial's Earnings Per Share Are Growing.

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. We can see that in the last three years BOK Financial grew its EPS by 11% per year. That's a pretty good rate, if the company can sustain it.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). I note that BOK Financial's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. BOK Financial maintained stable EBIT margins over the last year, all while growing revenue 14% to US$2.0b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

earnings-and-revenue-history
NasdaqGS:BOKF Earnings and Revenue History March 15th 2022

Fortunately, we've got access to analyst forecasts of BOK Financial's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are BOK Financial Insiders Aligned With All Shareholders?

Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So as you can imagine, the fact that BOK Financial insiders own a significant number of shares certainly appeals to me. In fact, they own 57% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. At the current share price, that insider holding is worth a whopping US$4.0b. Now that's what I call some serious skin in the game!

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. Well, based on the CEO pay, I'd say they are indeed. I discovered that the median total compensation for the CEOs of companies like BOK Financial with market caps between US$4.0b and US$12b is about US$6.7m.

The BOK Financial CEO received total compensation of just US$1.9m in the year to . That's clearly well below average, so at a glance, that arrangement seems generous to shareholders, and points to a modest remuneration culture. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.

Should You Add BOK Financial To Your Watchlist?

As I already mentioned, BOK Financial is a growing business, which is what I like to see. Earnings growth might be the main game for BOK Financial, but the fun does not stop there. Boasting both modest CEO pay and considerable insider ownership, I'd argue this one is worthy of the watchlist, at least. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with BOK Financial (at least 1 which is significant) , and understanding these should be part of your investment process.

Although BOK Financial certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

What are the risks and opportunities for BOK Financial?

BOK Financial Corporation operates as the financial holding company for BOKF, NA that provides various financial products and services in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona, and Kansas/Missouri.

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Rewards

  • Trading at 24.9% below our estimate of its fair value

  • Earnings are forecast to grow 7.11% per year

Risks

  • Significant insider selling over the past 3 months

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