Should you add the Community Banking System (NYSE:CBU) to your watch list today?
For starters, it might seem like a good idea (and an exciting prospect) to buy a company that tells investors a good story, even if it completely lacks a track record of revenue and earnings. But as Peter Lynch said in One Up on Wall Street“Long shots almost never pay off.”
So if you’re like me, you might be more interested in profitable and growing businesses, like Community banking system (NYSE: CBU). While that doesn’t make stocks worth buying at any price, you can’t deny that successful capitalism ultimately requires profits. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when pressed.
Check out our latest review for Community Bank System
How fast does the community banking system increase earnings per share?
Even with very modest growth rates, a company will generally do well if it improves its earnings per share (EPS) year after year. It is therefore not surprising that some investors are more inclined to invest in profitable companies. Good to see that Community Bank System’s EPS has grown from $3.10 to $3.52 in twelve months. I doubt many will complain about that 14% gain.
A careful look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. Not all Community Bank System revenue this year is revenue operations, so keep in mind that the revenue and margin figures I used may not be the best representation of the underlying business. Community Bank System maintained stable EBIT margins over the past year, while growing revenue 8.1% to $629 million. It is progress.
In the table below, you can see how the company has increased its profits and revenue over time. To see the actual numbers, click on the chart.
You don’t drive with your eyes on the rearview mirror, so you might be more interested in that free report showing analyst forecasts for Community Bank System future profits.
Are community banking insiders aligned with all shareholders?
I feel safer owning stock in a company if insiders also own stock, thereby aligning our interests more closely. So it’s good to see that insiders in the community banking system have a lot of capital invested in the stock. Indeed, they hold for 48 million dollars of its shares. It shows strong buy-in and can indicate belief in the business strategy. Even though that’s only about 1.2% of the company, it’s enough money to indicate alignment between company executives and common stockholders.
Is the community banking system worth watching?
An important encouraging feature of the community banking system is that it increases its profits. If that’s not enough on its own, there are also the fairly notable levels of insider ownership. This combination appeals to me, to begin with. So yeah, I think the stock is worth watching. If you think Community Bank System might suit your style of investing, you can go straight to its annual report, or you can first check out our discounted cash flow (DCF) assessment for the company.
While the community banking system certainly looks good to me, I’d like it more if insiders bought stocks. If you also like to see insiders buy, then this free list of growing companies that insiders are buying might be exactly what you’re looking for.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.