Here's Why We Think Seacoast Banking Corporation of Florida (NASDAQ:SBCF) Is Well Worth Watching

By
Simply Wall St
Published
January 04, 2022
NasdaqGS:SBCF
Source: Shutterstock

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

So if you're like me, you might be more interested in profitable, growing companies, like Seacoast Banking Corporation of Florida (NASDAQ:SBCF). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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.

View our latest analysis for Seacoast Banking Corporation of Florida

Seacoast Banking Corporation of Florida's Earnings Per Share Are Growing.

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That makes EPS growth an attractive quality for any company. We can see that in the last three years Seacoast Banking Corporation of Florida grew its EPS by 14% per year. That's a pretty good rate, if the company can sustain it.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Not all of Seacoast Banking Corporation of Florida'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. While we note Seacoast Banking Corporation of Florida's EBIT margins were flat over the last year, revenue grew by a solid 24% to US$343m. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

earnings-and-revenue-history
NasdaqGS:SBCF Earnings and Revenue History January 4th 2022

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 Seacoast Banking Corporation of Florida?

Are Seacoast Banking Corporation of Florida Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Seacoast Banking Corporation of Florida insiders have a significant amount of capital invested in the stock. Indeed, they hold US$36m worth of its stock. That's a lot of money, and no small incentive to work hard. Despite being just 1.7% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. Well, based on the CEO pay, I'd say they are indeed. I discovered that the median total compensation for the CEOs of companies like Seacoast Banking Corporation of Florida with market caps between US$1.0b and US$3.2b is about US$3.6m.

The CEO of Seacoast Banking Corporation of Florida only received US$1.4m in total compensation for the year ending . That's clearly well below average, so at a glance, that arrangement seems generous to shareholders, and points to a modest remuneration culture. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Should You Add Seacoast Banking Corporation of Florida To Your Watchlist?

As I already mentioned, Seacoast Banking Corporation of Florida is a growing business, which is what I like to see. Earnings growth might be the main game for Seacoast Banking Corporation of Florida, 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 3 warning signs we've spotted with Seacoast Banking Corporation of Florida .

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access 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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