Some have more money than common sense, they say, so even companies with no income, no profit, and a history of default can easily find investors. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
In the age of investing in the blue sky of tech stocks, my choice may seem old-fashioned; I always prefer profitable businesses like Apogée Financial Partners (NASDAQ: PNFP). Even if stocks are fully valued today, most capitalists would recognize its benefits as a demonstration of constant value generation. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when in a hurry.
Check out our latest analysis for Pinnacle Financial Partners
Pinnacle Financial Partners earnings per share are growing.
As one of my mentors once told me, the stock price tracks earnings per share (EPS). Therefore, many investors like to buy stocks of companies with growing EPS. It is certainly nice to see that Pinnacle Financial Partners has managed to increase its EPS by 20% per year over three years. As a general rule, we would say that if a company can follow this kind of growth, shareholders will be smiling.
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 see that the turnover of Pinnacle Financial Partners operations was lower than its turnover for the last twelve months, which could skew my analysis of its margins. Although we note that Pinnacle Financial Partners’ EBIT margins were stable over the past year, revenue increased 43% to US $ 1.3 billion. It’s really positive.
You can take a look at the company’s revenue and profit growth trend, in the graph below. Click on the graph to see the exact numbers.
As we live in the present moment at all times, there is no doubt in my mind that the future matters more than the past. So why not check out this interactive graph showing BPA’s future estimates for Pinnacle Financial Partners?
Are Pinnacle Financial Partners Insiders Aligned with All Shareholders?
We wouldn’t expect to see insiders owning a significant percentage of a US $ 7.7 billion company like Pinnacle Financial Partners. But we are reassured by the fact that they have invested in the company. Indeed, they have invested a sparkling mountain of wealth, currently valued at US $ 188 million. This suggests to me that management will be very attentive to the interests of shareholders when making a decision!
It means a lot to see insiders investing in the company, but I wonder if the compensation policies are shareholder friendly. Well, based on the CEO salary, I would say they are indeed. For companies with a market cap between $ 4.0 billion and $ 12 billion, like Pinnacle Financial Partners, the median CEO salary is around $ 6.3 million.
The CEO of Pinnacle Financial Partners received US $ 4.4 million in compensation for the fiscal year ended. This is lower than the average for similar sized companies and seems pretty reasonable to me. 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. I would also say that reasonable pay levels are a testament to good decision making more generally.
Does Pinnacle Financial Partners deserve a spot on your watchlist?
You cannot deny that Pinnacle Financial Partners has increased its earnings per share at a very impressive rate. It is attractive. If that’s not enough, also consider that the CEO’s compensation is quite reasonable and that insiders are well invested alongside other shareholders. Everyone has their own tastes, but I think all of this makes Pinnacle Financial Partners quite interesting. However, be aware that Pinnacle Financial Partners shows 1 warning sign in our investment analysis , you must know…
Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that to do have these characteristics. You can access a free list of them here.
Please note that the insider dealing discussed in this article refers to reportable trades in the relevant jurisdiction.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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