First Business Financial Services (NASDAQ:FBIZ) Ticks All The Boxes When It Comes To Earnings Growth

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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn’t your style, you like companies that generate revenue, and even earn profits, then you may well be interested in First Business Financial Services (NASDAQ:FBIZ). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide First Business Financial Services with the means to add long-term value to shareholders.

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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 makes EPS growth an attractive quality for any company. Over the last three years, First Business Financial Services has grown EPS by 7.6% per year. While that sort of growth rate isn’t anything to write home about, it does show the business is growing.

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 First Business Financial Services’ 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. First Business Financial Services maintained stable EBIT margins over the last year, all while growing revenue 8.2% to US$151m. That’s a real positive.

The chart below shows how the company’s bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

See our latest analysis for First Business Financial Services

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 First Business Financial Services?

It’s pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that First Business Financial Services insiders have a significant amount of capital invested in the stock. Indeed, they hold US$27m worth of its stock. That’s a lot of money, and no small incentive to work hard. Those holdings account for over 6.2% of the company; visible skin in the game.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between US$200m and US$800m, like First Business Financial Services, the median CEO pay is around US$2.3m.

First Business Financial Services’ CEO took home a total compensation package worth US$1.2m in the year leading up to December 2024. That comes in below the average for similar sized companies and seems pretty reasonable. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

As previously touched on, First Business Financial Services is a growing business, which is encouraging. The fact that EPS is growing is a genuine positive for First Business Financial Services, but the pleasant picture gets better than that. With company insiders aligning themselves considerably with the company’s success and modest CEO compensation, there’s no arguments that this is a stock worth looking into. Now, you could try to make up your mind on First Business Financial Services by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

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.