For the uninitiated, it may seem like a good idea (and an attractive prospect) to buy companies that tell investors a good story, even if they don't currently have a track record of revenue or profits. In some cases, these stories can cloud investors' minds and lead them to invest based on their emotions rather than the merits of a good company's fundamentals. Although cash-rich companies may suffer losses for years, they must eventually generate profits. Otherwise, investors will move on and the company will decline.
So if this idea of high risk and high reward doesn't suit you, you might be more interested in profitable growth companies such as: united security bankshare (NASDAQ:UBFO). This doesn't necessarily indicate whether it's undervalued or not, but the profitability of the business is enough to justify some valuation, especially if it's growing.
See our latest analysis for United Security Bancshares.
How fast is United Security Bancshare growing?
Generally, if a company is growing its earnings per share (EPS), the share price should follow a similar trend. That makes his EPS growth an attractive quality for any company. It's certainly pleasing to see that United Security Bancshares was able to grow his EPS by 30% per year over his three years. If the company can maintain that kind of growth, we expect shareholders to go home satisfied.
Revenue growth is a good indicator that growth is sustainable and, when combined with high earnings before interest and tax (EBIT) margins, can help a company maintain a competitive advantage in the market. This is an excellent method. Not All of United Security Bancshares' Earnings This Year Was Earnings From management, so please note that the revenue and profit figures used in this article may not be the most representative of the underlying business. We note that United Security Bancshares achieved a similar EBIT margin to last year, but revenue increased 14% to US$53m. That's encouraging news for the company!
You can see the company's revenue and profit growth trends in the graph below. Click on the graph to see exact numbers.
United Security Bancshares doesn't have a huge market capitalization of US$123m, so you should always check its cash and debt. in front Too excited about the prospect.
Are United Securities Bankshare insiders aligned with all shareholders?
Investors are always looking for a vote of confidence in the companies they own, and insider buying is one of the key indicators of market optimism. This is because insider buying often indicates that people close to the company are confident that the stock price will rise. Of course, we can't know what insiders are thinking, we can only judge their actions.
We note that insiders sold US$133k worth of shares in the last year. However, this is significantly less than the US$955k that insiders spent on buying shares. This bodes well for United Security Bancshares, as it highlights the fact that those important to the company have great confidence in its future. Zooming in, we can see that the biggest insider purchase was by Director Jagroop Gill for US$511k worth of shares (about US$6.47 per share).
In addition to insider buying, another encouraging sign for United Securities Bancshares is that insiders, as a group, own a significant stake. In fact, their holdings are valued at US$25 million. That's a lot of money and no small incentive to work hard. This represents his 20% of the company and shows a high level of alignment with shareholders.
Insiders already own a significant amount of shares and have been buying more, but the good news for ordinary shareholders doesn't stop there. Most notable is that CEO Dennis Woods' compensation is relatively modest compared to his CEOs at companies of similar size. For companies like United Security Bancshares with a market capitalization below his USD 200 million, the median CEO compensation is around USD 689,000.
The CEO of United Security Bancshares received compensation of US$587,000 for the year ended December 2022. This is actually below the median for his CEOs at similarly sized companies. CEO compensation may not be the most important aspect for a company to consider, but if it's reasonable, it gives us a little bit more confidence that management is looking out for shareholder interests. The argument is generally made that a reasonable salary level is evidence of good decision making.
Should you add United Security Bancshares to your watchlist?
If you believe that stock prices follow earnings per share, then you should dig deeper into United Security Bancshares' strong EPS growth. Additionally, company insiders have increased their significant stake in the company. Smart investors will want to keep an eye on this stock. However, you should always think about the risks.Good example we found 1 warning sign for United Security Bancshares you should know.
There are plenty of other companies where insiders are buying up shares. So if you like the sound of United Security Bancshares, you'll love this curated collection of US companies that have grown with insider buying over the past three months.
Please note that 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 using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
