I performed stock analysis for earnings growth and FS Bancorp (NASDAQ: FSBW) did it with ease

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Like a puppy chasing its tail, some new investors often chase “the next big thing,” even if that means buying “history stocks” with no income, let alone profit. But as Warren Buffett said, “If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you are the patsy.” When buying such historical stocks, investors are all too often the fools.

So if you’re like me, you might be more interested in profitable and growing businesses like FS Bancorp (NASDAQ: FSBW). While that doesn’t make stocks worth buying at all costs, you can’t deny that successful capitalism ultimately requires profits. 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 FS Bancorp growing?

If a company can sustain earnings per share (EPS) growth long enough, its stock price will eventually follow. This makes the growth of BPA an attractive quality for any business. As a tree regularly reaches the sky, FS Bancorp’s EPS has increased by 29% each year, compound, over three years. If the company can support this kind of growth, we expect shareholders to come out ahead.

A close look at growth in income and profit margins before interest and taxes (EBIT) can help inform a vision on the sustainability of recent earnings growth. I note that the income of FS Bancorp operations was lower than its turnover for the last twelve months, which could skew my analysis of its margins. FS Bancorp has maintained stable EBIT margins over the past year, while increasing revenues by 18% to US $ 125 million. It is progress.

In the graph below, you can see how the business has increased its profit and revenue over time. Click on the graph to see the exact numbers.

NasdaqCM: FSBW Revenue and Revenue History as of December 12, 2021

As we live in the present moment all the time, there is no doubt in my mind that the future matters more than the past. So why not check it out this interactive graph showing future BPA estimates, for FS Bancorp?

Are FS Bancorp insiders aligned with all shareholders?

I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. Accordingly, I am encouraged that insiders own shares of FS Bancorp of considerable value. To be precise, they have $ 20 million in stock. That’s a lot of money, and that’s no small incentive to work hard. This represents 7.5% of the company, demonstrating a high level of alignment with shareholders.

Does FS Bancorp deserve to be watched?

For growth investors like myself, FS Bancorp’s gross earnings growth rate is a beacon overnight. Additionally, the high level of insider ownership impresses me and suggests that I am not the only one enjoying the growth of BPA. So this is most likely the kind of business that I like to spend time researching, in order to discern its true value. Even so, know that FS Bancorp watch 3 warning signs in our investment analysis , and 1 of them is potentially serious …

Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that To do have these characteristics. You can access a free list of them here.

Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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