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The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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.
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. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View 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. Over the last year, Manhattan Bridge Capital increased its EPS from US$0.45 to US$0.48. That's a fair increase of 5.6%.
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 7.7% to US$7.3m. 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.
Manhattan Bridge Capital isn't a huge company, given its market capitalisation of US$58m. That makes it extra important to check on its balance sheet strength.
Are Manhattan Bridge Capital 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
With strong conviction, Manhattan Bridge Capital insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the US$65k that Founder Assaf Ran spent buying shares (at an average price of about US$4.98). Purchases like this clue us in to the to the faith management has in the business' future.