I Built A List Of Growing Companies And ChoiceOne Financial Services (NASDAQ:COFS) Made The Cut

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like ChoiceOne Financial Services (NASDAQ:COFS). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for ChoiceOne Financial Services

How Fast Is ChoiceOne Financial Services Growing Its Earnings Per Share?

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. ChoiceOne Financial Services boosted its trailing twelve month EPS from US$1.65 to US$1.97, in the last year. That's a 20% gain; respectable growth in the broader scheme of things.

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. Not all of ChoiceOne Financial Services's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. ChoiceOne Financial Services maintained stable EBIT margins over the last year, all while growing revenue 120% to US$65m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

ChoiceOne Financial Services isn't a huge company, given its market capitalization of US$235m. That makes it extra important to check on its balance sheet strength.

Are ChoiceOne Financial Services 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. So it is good to see that ChoiceOne Financial Services insiders have a significant amount of capital invested in the stock. To be specific, they have US$17m worth of shares. That's a lot of money, and no small incentive to work hard. That amounts to 7.4% of the company, demonstrating a degree of high-level alignment with shareholders.

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. A brief analysis of the CEO compensation suggests they are. I discovered that the median total compensation for the CEOs of companies like ChoiceOne Financial Services with market caps between US$100m and US$400m is about US$1.0m.

The ChoiceOne Financial Services CEO received total compensation of just US$428k in the year to . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. 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.

Does ChoiceOne Financial Services Deserve A Spot On Your Watchlist?

One positive for ChoiceOne Financial Services is that it is growing EPS. That's nice to see. Earnings growth might be the main game for ChoiceOne Financial Services, but the fun does not stop there. With a meaningful level of insider ownership, and reasonable CEO pay, a reasonable mind might conclude that this is one stock worth watching. Still, you should learn about the 2 warning signs we've spotted with ChoiceOne Financial Services (including 1 which is potentially serious) .

Although ChoiceOne Financial Services 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.

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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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