Yahoo Finance Here's Why We Think Manhattan Bridge Capital (NASDAQ:LOAN) Is Well Worth Watching
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
In contrast to all that, many investors prefer to focus on companies like Manhattan Bridge Capital (NASDAQ:LOAN), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View our latest analysis for Manhattan Bridge Capital
Manhattan Bridge Capital's Improving Profits
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. Over the last year, Manhattan Bridge Capital increased its EPS from US$0.45 to US$0.48. That's a fair increase of 5.6%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. It's noted that Manhattan Bridge Capital's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. EBIT margins for Manhattan Bridge Capital remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.7% to US$7.3m. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
Manhattan Bridge Capital isn't a huge company, given its market capitalisation of US$58m. That makes it extra important to check on its balance sheet strength.
Are Manhattan Bridge Capital Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
With strong conviction, Manhattan Bridge Capital insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the US$65k that Founder Assaf Ran spent buying shares (at an average price of about US$4.98). Purchases like this clue us in to the to the faith management has in the business' future.
On top of the insider buying, it's good to see that Manhattan Bridge Capital insiders have a valuable investment in the business. Indeed, they hold US$14m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 25% of the shares on issue for the business, an appreciable amount considering the market cap.
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because on our analysis the CEO, Assaf Ran, is paid less than the median for similar sized companies. The median total compensation for CEOs of companies similar in size to Manhattan Bridge Capital, with market caps under US$200m is around US$678k.
The Manhattan Bridge Capital CEO received US$529k in compensation for the year ending December 2023. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.
Does Manhattan Bridge Capital Deserve A Spot On Your Watchlist?
One positive for Manhattan Bridge Capital is that it is growing EPS. That's nice to see. 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. However, before you get too excited we've discovered 3 warning signs for Manhattan Bridge Capital (2 shouldn't be ignored!) that you should be aware of.
The good news is that Manhattan Bridge Capital is not the only growth stock with insider buying. Here's a list of growth-focused companies in the US 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. 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.
