I Ran A Stock Scan For Earnings Growth And Capital City Bank Group (NASDAQ:CCBG) 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 completely lacks a track record of revenue and profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Capital City Bank Group (NASDAQ:CCBG). 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.

See our latest analysis for Capital City Bank Group

Capital City Bank Group's Earnings Per Share Are Growing.

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Who among us would not applaud Capital City Bank Group's stratospheric annual EPS growth of 39%, compound, over the last three years? That sort of growth never lasts long, but like a shooting star it is well worth watching when it happens.

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 Capital City Bank Group's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Capital City Bank Group maintained stable EBIT margins over the last year, all while growing revenue 44% to US$222m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Capital City Bank Group?

Are Capital City Bank 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.

We haven't seen any insiders selling Capital City Bank Group shares, in the last year. With that in mind, it's heartening that William Grant, the Independent Director of the company, paid US$25k for shares at around US$22.64 each.

Along with the insider buying, another encouraging sign for Capital City Bank Group is that insiders, as a group, have a considerable shareholding. With a whopping US$90m worth of shares as a group, insiders have plenty riding on the company's success. At 21% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Is Capital City Bank Group Worth Keeping An Eye On?

Capital City Bank Group's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. The cherry on top is that insiders own a bunch of shares, and one has been buying more. Because of the potential that it has reached an inflection point, I'd suggest Capital City Bank Group belongs on the top of your watchlist. We should say that we've discovered 2 warning signs for Capital City Bank Group (1 doesn't sit too well with us!) that you should be aware of before investing here.

The good news is that Capital City Bank 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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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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