If EPS Growth Is Important To You, Manhattan Bridge Capital (NASDAQ:LOAN) Presents An Opportunity

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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Manhattan Bridge Capital (NASDAQ:LOAN), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Manhattan Bridge Capital with the means to add long-term value to shareholders.

Check out our latest analysis for Manhattan Bridge Capital

Manhattan Bridge Capital's Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. Manhattan Bridge Capital boosted its trailing twelve month EPS from US$0.44 to US$0.50, in the last year. This amounts to a 12% gain; a figure that shareholders will be pleased to see.

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. It's noted that Manhattan Bridge Capital's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. EBIT margins for Manhattan Bridge Capital remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 9.7% to US$7.4m. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Since Manhattan Bridge Capital is no giant, with a market capitalisation of US$60m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Manhattan Bridge Capital Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Manhattan Bridge Capital insiders have a significant amount of capital invested in the stock. Indeed, they hold US$15m worth of its stock. This considerable investment should help drive long-term value in the business. Those holdings account for over 25% of the company; visible skin in the game.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations under US$200m, like Manhattan Bridge Capital, the median CEO pay is around US$677k.

Manhattan Bridge Capital offered total compensation worth US$529k to its CEO in the year to December 2023. That comes in below the average for similar sized companies and seems pretty reasonable. 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 a culture of integrity, in a broader sense.

Should You Add Manhattan Bridge Capital To Your Watchlist?

As previously touched on, Manhattan Bridge Capital is a growing business, which is encouraging. Earnings growth might be the main attraction for Manhattan Bridge Capital, but the fun does not stop there. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. It is worth noting though that we have found 4 warning signs for Manhattan Bridge Capital (2 are a bit concerning!) that you need to take into consideration.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

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.