With EPS Growth And More, Limbach Holdings (NASDAQ:LMB) Makes An Interesting Case

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Limbach Holdings (NASDAQ:LMB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Limbach Holdings with the means to add long-term value to shareholders.

Check out our latest analysis for Limbach Holdings

Limbach Holdings' 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) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Limbach Holdings has grown EPS by 31% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The music to the ears of Limbach Holdings shareholders is that EBIT margins have grown from 2.9% to 5.7% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Limbach Holdings' forecast profits?

Are Limbach Holdings 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.

We note that Limbach Holdings insiders spent US$150k on stock, over the last year; in contrast, we didn't see any selling. That's nice to see, because it suggests insiders are optimistic. Zooming in, we can see that the biggest insider purchase was by President Michael McCann for US$102k worth of shares, at about US$35.47 per share.

Along with the insider buying, another encouraging sign for Limbach Holdings is that insiders, as a group, have a considerable shareholding. As a matter of fact, their holding is valued at US$31m. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 9.3% of the shares on issue for the business, an appreciable amount considering the market cap.

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because Limbach Holdings' CEO, Mike McCann, is paid at a relatively modest level when compared to other CEOs for companies of this size. Our analysis has discovered that the median total compensation for the CEOs of companies like Limbach Holdings with market caps between US$200m and US$800m is about US$2.4m.

Limbach Holdings' CEO took home a total compensation package of US$1.1m in the year prior to December 2022. First impressions seem to indicate a compensation policy that is favourable to shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Does Limbach Holdings Deserve A Spot On Your Watchlist?

You can't deny that Limbach Holdings 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. We should say that we've discovered 2 warning signs for Limbach Holdings that you should be aware of before investing here.

Keen growth investors love to see insider buying. Thankfully, Limbach Holdings 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.