Yahoo Finance If EPS Growth Is Important To You, TrustCo Bank Corp NY (NASDAQ:TRST) Presents An Opportunity
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. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
In contrast to all that, many investors prefer to focus on companies like TrustCo Bank Corp NY (NASDAQ:TRST), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide TrustCo Bank Corp NY with the means to add long-term value to shareholders.
View our latest analysis for TrustCo Bank Corp NY
TrustCo Bank Corp NY's Earnings Per Share Are Growing
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. TrustCo Bank Corp NY managed to grow EPS by 9.8% per year, over three years. That's a pretty good rate, if the company can sustain it.
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. Our analysis has highlighted that TrustCo Bank Corp NY's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. TrustCo Bank Corp NY maintained stable EBIT margins over the last year, all while growing revenue 8.7% to US$200m. That's progress.
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.
While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check TrustCo Bank Corp NY's balance sheet strength, before getting too excited.
Are TrustCo Bank Corp NY 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Any way you look at it TrustCo Bank Corp NY shareholders can gain quiet confidence from the fact that insiders shelled out US$694k to buy stock, over the last year. This, combined with the lack of sales from insiders, should be a great signal for shareholders in what's to come. It is also worth noting that it was General Counsel & Corporate Secretary Michael Hall who made the biggest single purchase, worth US$105k, paying US$33.66 per share.
The good news, alongside the insider buying, for TrustCo Bank Corp NY bulls is that insiders (collectively) have a meaningful investment in the stock. To be specific, they have US$21m worth of shares. That's a lot of money, and no small incentive to work hard. Despite being just 3.0% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.
While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because on our analysis the CEO, Rob McCormick, is paid less than the median for similar sized companies. The median total compensation for CEOs of companies similar in size to TrustCo Bank Corp NY, with market caps between US$400m and US$1.6b, is around US$3.8m.
TrustCo Bank Corp NY's CEO took home a total compensation package worth US$3.2m in the year leading up to December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Is TrustCo Bank Corp NY Worth Keeping An Eye On?
One important encouraging feature of TrustCo Bank Corp NY is that it is growing profits. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. We should say that we've discovered 1 warning sign for TrustCo Bank Corp NY that you should be aware of before investing here.
The good news is that TrustCo Bank Corp NY is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!
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.
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