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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 USCB Financial Holdings (NASDAQ:USCB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide USCB Financial Holdings with the means to add long-term value to shareholders.
Over the last three years, USCB Financial Holdings has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. USCB Financial Holdings' EPS has risen over the last 12 months, growing from US$0.92 to US$1.03. This amounts to a 12% gain; a figure that shareholders will be pleased to see.
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 USCB Financial Holdings' 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. USCB Financial Holdings maintained stable EBIT margins over the last year, all while growing revenue 10% to US$72m. That's a real positive.
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.
NasdaqGM:USCB Earnings and Revenue History January 6th 2025
Are USCB Financial Holdings Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.
It's good to see USCB Financial Holdings insiders walking the walk, by spending US$695k on shares in just twelve months. And when you consider that there was no insider selling, you can understand why shareholders might believe that there are brighter days ahead. It is also worth noting that it was Executive VP & CFO Robert Anderson who made the biggest single purchase, worth US$226k, paying US$11.48 per share.
It's commendable to see that insiders have been buying shares in USCB Financial Holdings, but there is more evidence of shareholder friendly management. Namely, USCB Financial Holdings has a very reasonable level of CEO pay. The median total compensation for CEOs of companies similar in size to USCB Financial Holdings, with market caps between US$200m and US$800m, is around US$2.2m.
The USCB Financial Holdings CEO received total compensation of just US$1.1m in the year to December 2023. That looks like a modest pay packet, and may hint at a certain respect for the interests of 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 good governance, more generally.
Does USCB Financial Holdings Deserve A Spot On Your Watchlist?
As previously touched on, USCB Financial Holdings is a growing business, which is encouraging. And there's more to USCB Financial Holdings, with the insider buying and modest CEO pay being a great look for those with an eye on the company. If these factors aren't enough to secure USCB Financial Holdings a spot on the watchlist, then it certainly warrants a closer look at the very least. Of course, just because USCB Financial Holdings is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
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.
