Stock Analysis

Here's Why I Think Pathfinder Bancorp (NASDAQ:PBHC) Might Deserve Your Attention Today

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NasdaqCM:PBHC
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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. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

In contrast to all that, I prefer to spend time on companies like Pathfinder Bancorp (NASDAQ:PBHC), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Pathfinder Bancorp

Pathfinder Bancorp's Earnings Per Share Are Growing.

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). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Pathfinder Bancorp managed to grow EPS by 11% per year, over three years. That's a pretty good rate, if the company can sustain it.

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 Pathfinder Bancorp'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. Pathfinder Bancorp maintained stable EBIT margins over the last year, all while growing revenue 8.6% to US$34m. 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.

earnings-and-revenue-history
NasdaqCM:PBHC Earnings and Revenue History March 23rd 2021

Since Pathfinder Bancorp is no giant, with a market capitalization of US$70m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Pathfinder Bancorp 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did Pathfinder Bancorp insiders refrain from selling stock during the year, but they also spent US$68k buying it. That's nice to see, because it suggests insiders are optimistic. We also note that it was the Independent Director, George Joyce, who made the biggest single acquisition, paying US$22k for shares at about US$14.11 each.

Along with the insider buying, another encouraging sign for Pathfinder Bancorp is that insiders, as a group, have a considerable shareholding. To be specific, they have US$15m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 21% of the company, demonstrating a degree of high-level alignment with shareholders.

Should You Add Pathfinder Bancorp To Your Watchlist?

One positive for Pathfinder Bancorp is that it is growing EPS. That's nice to see. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for my watchlist - and arguably a research priority. We don't want to rain on the parade too much, but we did also find 2 warning signs for Pathfinder Bancorp that you need to be mindful of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Pathfinder Bancorp, you'll probably love this free list of growing companies that insiders are buying.

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

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What are the risks and opportunities for Pathfinder Bancorp?

Pathfinder Bancorp, Inc. operates as a holding company for Pathfinder Bank that provides various banking and financial products and services primarily in Oswego and Onondaga Counties, New York.

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Rewards

  • Price-To-Earnings ratio (11.3x) is below the US market (15x)

  • Earnings grew by 26.9% over the past year

Risks

No risks detected for PBHC from our risks checks.

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Pathfinder Bancorp

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