With EPS Growth And More, OP Bancorp (NASDAQ:OPBK) Makes An Interesting Case

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like OP Bancorp (NASDAQ:OPBK). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for OP Bancorp

How Quickly Is OP Bancorp Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. It certainly is nice to see that OP Bancorp has managed to grow EPS by 28% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. It's noted that OP Bancorp's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. OP Bancorp maintained stable EBIT margins over the last year, all while growing revenue 20% to US$92m. That's a real positive.

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.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for OP Bancorp?

Are OP Bancorp Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news is that OP Bancorp insiders spent a whopping US$3.4m on stock in just one year, without so much as a single sale. Knowing this, OP Bancorp will have have all eyes on them in anticipation for the what could happen in the near future. It is also worth noting that it was Independent Chairman of the Board Brian Choi who made the biggest single purchase, worth US$437k, paying US$12.00 per share.

On top of the insider buying, it's good to see that OP Bancorp insiders have a valuable investment in the business. As a matter of fact, their holding is valued at US$35m. This considerable investment should help drive long-term value in the business. Those holdings account for over 24% of the company; visible skin in the game.

Should You Add OP Bancorp To Your Watchlist?

You can't deny that OP Bancorp has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for OP Bancorp (1 is a bit unpleasant) you should be aware of.

Keen growth investors love to see insider buying. Thankfully, OP 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.

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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.