Nasdaq Today – Here’s Why I Think Bank of Commerce Holdings (NASDAQ:BOCH) Might Deserve Your Attention Today
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. 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, growing companies, like Bank of Commerce Holdings (NASDAQ:BOCH). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
See our latest analysis for Bank of Commerce Holdings
How Quickly Is Bank of Commerce Holdings Increasing Earnings Per Share?
As one of my mentors once told me, share price follows earnings per share (EPS). It’s no surprise, then, that I like to invest in companies with EPS growth. As a tree reaches steadily for the sky, Bank of Commerce Holdings’s EPS has grown 28% each year, compound, over three years. As a general rule, we’d say that if a company can keep up that sort of growth, shareholders will be smiling.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). I note that Bank of Commerce Holdings’s revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Bank of Commerce Holdings maintained stable EBIT margins over the last year, all while growing revenue 7.5% to US$59m. That’s a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Bank of Commerce Holdings’s forecast profits?
Are Bank of Commerce Holdings Insiders Aligned With All Shareholders?
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don’t always get it right.
It’s a pleasure to note that insiders spent US$890k buying Bank of Commerce Holdings shares, over the last year, without reporting any share sales whatsoever. And so I find myself almost expectant, and certainly hopeful, that this large outlay signals prescient optimism for the business. It is also worth noting that it was Independent Chairman of the Board Lyle Tullis who made the biggest single purchase, worth US$159k, paying US$10.57 per share.
The good news, alongside the insider buying, for Bank of Commerce Holdings bulls is that insiders (collectively) have a meaningful investment in the stock. To be specific, they have US$14m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 6.6% of the company; visible skin in the game.
While insiders are apparently happy to hold and accumulate shares, that is just part of the pretty picture. The cherry on top is that the CEO, Randy Eslick is paid comparatively modestly to CEOs at similar sized companies. I discovered that the median total compensation for the CEOs of companies like Bank of Commerce Holdings with market caps between US$100m and US$400m is about US$1.0m.
Bank of Commerce Holdings offered total compensation worth US$828k to its CEO in the year to . That seems pretty reasonable, especially given its below the median for similar sized companies. While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.
Is Bank of Commerce Holdings Worth Keeping An Eye On?
For growth investors like me, Bank of Commerce Holdings’s raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more, shares in the company. So I do think this is one stock worth watching. You should always think about risks though. Case in point, we’ve spotted 2 warning signs for Bank of Commerce Holdings you should be aware of, and 1 of them is a bit concerning.
The good news is that Bank of Commerce Holdings 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.
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This article by Simply Wall St is general in nature. 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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