Here's Why We Think Princeton Bancorp (NASDAQ:BPRN) Is Well Worth Watching

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.

In contrast to all that, many investors prefer to focus on companies like Princeton Bancorp (NASDAQ:BPRN), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Princeton Bancorp

How Quickly Is Princeton Bancorp Increasing Earnings Per Share?

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, Princeton Bancorp has grown EPS by 30% 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 Princeton Bancorp'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. Princeton Bancorp maintained stable EBIT margins over the last year, all while growing revenue 11% to US$73m. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

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

Are Princeton Bancorp 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

While Princeton Bancorp insiders did net US$566k selling stock over the last year, they invested US$1.0m, a much higher figure. An optimistic sign for those with Princeton Bancorp in their watchlist. It is also worth noting that it was Independent Director Martin Tuchman who made the biggest single purchase, worth US$380k, paying US$31.65 per share.

Along with the insider buying, another encouraging sign for Princeton Bancorp is that insiders, as a group, have a considerable shareholding. To be specific, they have US$47m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 25% of the company; visible skin in the game.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because on our analysis the CEO, Ed Dietzler, is paid less than the median for similar sized companies. The median total compensation for CEOs of companies similar in size to Princeton Bancorp, with market caps between US$100m and US$400m, is around US$1.6m.

Princeton Bancorp's CEO took home a total compensation package worth US$1.3m in the year leading up 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.

Should You Add Princeton Bancorp To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Princeton Bancorp's strong EPS growth. On top of that, insiders own a significant stake in the company and have been buying more shares. These things considered, this is one stock worth watching. We don't want to rain on the parade too much, but we did also find 2 warning signs for Princeton Bancorp (1 is concerning!) that you need to be mindful of.

Keen growth investors love to see insider buying. Thankfully, Princeton Bancorp 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.