Are CBM Bancorp (NASDAQ: CBMB) Profits Worth Your Attention?
Like a puppy chasing its tail, some new investors are often chasing “the next big thing,” even if that means buying “history stocks” with no income, let alone profit. But the reality is that when a business loses money every year, for long enough, its investors will usually take their share of those losses.
In the age of investing in the blue sky of tech stocks, my choice may seem old-fashioned; I always prefer profitable businesses like CBM Bancorp (NASDAQ: CBMB). Now, I’m not saying the stock is necessarily undervalued today; but I cannot shake the appreciation of the profitability of the company itself. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.
Check out our latest review for CBM Bancorp
How fast is CBM Bancorp increasing its earnings per share?
Even modest growth in earnings per share (EPS) can create significant value, when it is reliably sustained year over year. It is therefore not surprising that some investors are more inclined to invest in profitable companies. It is good to see that CBM Bancorp’s EPS fell from US $ 0.21 to US $ 0.26 over twelve months. I doubt that many are complaining about this 24% gain.
I like to see revenue growth as an indication that growth is sustainable, and I look for a high profit margin before interest and taxes (EBIT) to indicate a competitive gap (although some low-margin companies also have ditches). I note that the income of CBM Bancorp operations was lower than its turnover for the last twelve months, which could skew my analysis of its margins. Although we note that CBM Bancorp’s EBIT margins were stable over the past year, revenues increased 4.9% to US $ 8.6 million. It is progress.
You can check out the revenue and profit growth trend of the company in the chart below. For more details, click on the image.
Since CBM Bancorp is not a giant, with a market cap of $ 52 million, so you should definitely check its cash flow and debt. before too excited about his prospects.
Are CBM Bancorp Insiders Aligned With All Shareholders?
Generally, I think it’s worth considering how much the CEO is paid, as unreasonably high rates could be viewed as being against the interests of shareholders. For companies with a market cap of less than $ 200 million, like CBM Bancorp, the median CEO salary is around $ 527,000.
The CEO of CBM Bancorp received only US $ 205,000 in total compensation for the year ending. This is clearly well below par, so at first glance this arrangement seems generous to shareholders and indicates a culture of modest compensation. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. It can also be a sign of a culture of integrity, in the broad sense.
Is CBM Bancorp worth watching?
An important and encouraging feature of CBM Bancorp is that it increases its profits. On top of that, my confidence in the board is bolstered by the fact of the CEO’s reasonable compensation. So overall I think it’s at least worth considering for your watchlist. We don’t want to rain too much on the parade, but we also found 2 warning signs for CBM Bancorp that you need to be aware of.
You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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