Here’s why I think Affinity Bancshares (NASDAQ: AFBI) is an interesting stock
Like a puppy chasing its tail, some new investors often pursue âthe next big thing,â even if that means buying âhistory stocksâ with no income, let alone profit. But the reality is that when a business loses money every year, for long enough, its investors will usually take their share of those losses.
If, on the other hand, you like businesses that have revenue, and even profits, then you might be interested in Affinity Bancshares (NASDAQ: AFBI). Now, I’m not saying the stock is necessarily undervalued today; but I cannot shake the appreciation of the profitability of the company itself. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.
How fast is Affinity Bancshares increasing its earnings per share?
In business, but not in life, profit is a key measure of success; and stock prices tend to reflect earnings per share (EPS). So like the hint of a smile on a face I love, growing EPS usually makes me look twice. So it’s astonishing that Affinity Bancshares’ EPS has gone from US $ 0.27 to US $ 1.12 in just one year. When profits grow so quickly, it often means good things ahead for the business. But the key is to discern if something deep has changed, or if it’s just a one-time boost.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another idea of ââhow well the business is growing. I note that the income of Affinity Bancshares operations was lower than its turnover for the last twelve months, which could skew my analysis of its margins. Although we note that Affinity Bancshares’ EBIT margins were stable over the past year, revenue increased 40% to US $ 31 million. Itâs really positive.
You can take a look at the company’s revenue and profit growth trend, in the graph below. To see the actual numbers, click on the graph.
NasdaqCM: AFBI Revenue and Revenue History October 31, 2021
Affinity Bancshares is not a large company considering its market capitalization of $ 100 million. It is therefore very important to verify the strength of its balance sheet.
Are Affinity Bancshares Insiders Aligned with All Shareholders?
Like street kids who stand up for their beliefs, buying insider shares gives me reason to believe in a brighter future. Because often buying stocks is a sign that the buyer sees them as undervalued. Small purchases aren’t always indicative of conviction, however, and insiders don’t always make the right choices.
The good news is that Affinity Bancshares insiders spent US $ 826,000 on inventory in just a year, and I haven’t seen any sales. Like a flower bud approaching flowering, I become an expectant watcher, hopefully anticipating something splendid to happen. It should also be noted that it was Kenneth Lehman who made the largest single purchase, valued at US $ 213,000, paying US $ 12.96 per share.
In addition to insider buying, it’s good to see that Affinity Bancshares insiders have a valuable investment in the business. Indeed, they hold US $ 18 million worth of its shares. This shows strong buy-in and may indicate a belief in business strategy. This represents 18% of the company, demonstrating a high level of alignment with shareholders.
Is Affinity Bancshares worth watching?
Affinity Bancshares earnings per share growth levitated, like a mountain goat scaling the Alps. Equally encouraging; insiders own and buy more shares. Due to the potential to have reached an inflection point, I would suggest that Affinity Bancshares belongs to the High off your watch list. And the risks? Every business has them, and we’ve spotted 1 warning sign for Affinity Bancshares you should know.
There are many other companies that have insiders who buy stocks. So if you love the sound of Affinity Bancshares, you will probably love this one. free list of growing companies that insiders buy.
Please note that the insider dealing discussed in this article refers to reportable trades in the relevant jurisdiction.
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