Does Home Bancshares (Conway AR) (NYSE:HOMB) Deserve A Spot On Your Watchlist?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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

View our latest analysis for Home Bancshares (Conway AR)

How Fast Is Home Bancshares (Conway AR) Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Over the last three years, Home Bancshares (Conway AR) has grown EPS by 15% per year. That's a pretty good rate, if the company can sustain it.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Our analysis has highlighted that Home Bancshares (Conway AR)'s revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. EBIT margins for Home Bancshares (Conway AR) remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 15% to US$982m. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

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 Home Bancshares (Conway AR)?

Are Home Bancshares (Conway AR) Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that Home Bancshares (Conway AR) insiders have a significant amount of capital invested in the stock. We note that their impressive stake in the company is worth US$339m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. The median total compensation for CEOs of companies similar in size to Home Bancshares (Conway AR), with market caps between US$4.0b and US$12b, is around US$7.8m.

Home Bancshares (Conway AR) offered total compensation worth US$5.8m to its CEO in the year to December 2023. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Home Bancshares (Conway AR) To Your Watchlist?

One important encouraging feature of Home Bancshares (Conway AR) is that it is growing profits. The growth of EPS may be the eye-catching headline for Home Bancshares (Conway AR), but there's more to bring joy for shareholders. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. We don't want to rain on the parade too much, but we did also find 2 warning signs for Home Bancshares (Conway AR) (1 shouldn't be ignored!) that you need to be mindful of.

Although Home Bancshares (Conway AR) certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of companies that not only boast of strong growth but have also seen recent insider buying..

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.