If EPS Growth Is Important To You, First Commonwealth Financial (NYSE:FCF) Presents An Opportunity

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like First Commonwealth Financial (NYSE:FCF). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide First Commonwealth Financial with the means to add long-term value to shareholders.

See our latest analysis for First Commonwealth Financial

How Quickly Is First Commonwealth Financial Increasing Earnings Per Share?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. It certainly is nice to see that First Commonwealth Financial has managed to grow EPS by 27% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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 First Commonwealth Financial's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for First Commonwealth Financial remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 20% to US$467m. 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.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for First Commonwealth Financial's future profits.

Are First Commonwealth Financial Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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.

Our analysis into First Commonwealth Financial has shown that insiders have sold US$110k worth of shares over the last 12 months. This falls short of the share acquisition by Independent Director Ray Charley, who has acquired US$207k worth of shares, at an average price of US$13.04. Overall, that is something good to take away.

The good news, alongside the insider buying, for First Commonwealth Financial bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at US$27m. This considerable investment should help drive long-term value in the business. While their ownership only accounts for 1.9%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because First Commonwealth Financial's CEO, Mike Price, is paid at a relatively modest level when compared to other CEOs for companies of this size. For companies with market capitalisations between US$1.0b and US$3.2b, like First Commonwealth Financial, the median CEO pay is around US$5.0m.

The CEO of First Commonwealth Financial only received US$1.4m in total compensation for the year ending December 2022. First impressions seem to indicate a compensation policy that is favourable to shareholders. 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 a culture of integrity, in a broader sense.

Does First Commonwealth Financial Deserve A Spot On Your Watchlist?

You can't deny that First Commonwealth Financial has grown its earnings per share at a very impressive rate. That's attractive. Moreover, the management and board of the company hold a significant stake in the company, with one party adding to this total. Astute investors will want to keep this stock on watch. Still, you should learn about the 2 warning signs we've spotted with First Commonwealth Financial (including 1 which is potentially serious).

There are plenty of other companies that have insiders buying up shares. So if you like the sound of First Commonwealth Financial, you'll probably love this curated collection of companies in the US that have witnessed growth alongside 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. 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.