Yahoo Finance We Ran A Stock Scan For Earnings Growth And Wintrust Financial (NASDAQ:WTFC) Passed With Ease
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Wintrust Financial (NASDAQ:WTFC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Wintrust Financial with the means to add long-term value to shareholders.
View our latest analysis for Wintrust Financial
Wintrust Financial's Earnings Per Share Are Growing
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. It certainly is nice to see that Wintrust Financial has managed to grow EPS by 29% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. Not all of Wintrust Financial's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for Wintrust Financial remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 20% to US$2.1b. That's encouraging news for the company!
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Wintrust Financial?
Are Wintrust Financial 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The US$504k worth of shares that insiders sold during the last 12 months pales in comparison to the US$1.4m they spent on acquiring shares in the company. This bodes well for Wintrust Financial as it highlights the fact that those who are important to the company having a lot of faith in its future. Zooming in, we can see that the biggest insider purchase was by company insider Brian Kenney for US$609k worth of shares, at about US$92.23 per share.
On top of the insider buying, it's good to see that Wintrust Financial insiders have a valuable investment in the business. Holding US$61m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. That's certainly enough to let shareholders know that management will be very focussed on long term growth.
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. The cherry on top is that the CEO, Tim Crane is paid comparatively modestly to CEOs at similar sized companies. For companies with market capitalisations between US$2.0b and US$6.4b, like Wintrust Financial, the median CEO pay is around US$6.8m.
The CEO of Wintrust Financial only received US$2.2m in total compensation for the year ending December 2022. First impressions seem to indicate a compensation policy that is favourable to shareholders. 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. It can also be a sign of good governance, more generally.
Is Wintrust Financial Worth Keeping An Eye On?
For growth investors, Wintrust Financial's raw rate of earnings growth is a beacon in the night. Furthermore, company insiders have been adding to their significant stake in the company. Astute investors will want to keep this stock on watch. However, before you get too excited we've discovered 1 warning sign for Wintrust Financial that you should be aware of.
Keen growth investors love to see insider buying. Thankfully, Wintrust Financial isn't the only one. You can see a a free list of them here.
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. 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.
