For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit.  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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Bancorp (NASDAQ:TBBK). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

How Fast Is Bancorp Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price.  That makes EPS growth an attractive quality for any company.   It certainly is nice to see that Bancorp has managed to grow EPS by 33% per year over three years.   If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.  

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market.   It's noted that Bancorp's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins.     While we note Bancorp achieved similar EBIT margins to last year, revenue grew by a solid 19% to US$457m.  That's encouraging news for the company!  

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.

NasdaqGS:TBBK Earnings and Revenue History April 28th 2024

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Bancorp.

Are Bancorp Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market.  So it is good to see that Bancorp insiders have a significant amount of capital invested in the stock.     Given insiders own a significant chunk of shares, currently valued at US$71m, they have plenty of motivation to push the business to succeed.   That's certainly enough to let shareholders know that management will be very focussed on long term growth.  

Does Bancorp Deserve A Spot On Your Watchlist?

You can't deny that Bancorp has grown its earnings per share at a very impressive rate. That's attractive.   With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment.  On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research.     Now, you could try to make up your mind on Bancorp by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.