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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like BayFirst Financial (NASDAQ:BAFN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide BayFirst Financial with the means to add long-term value to shareholders.

See our latest analysis for BayFirst Financial

BayFirst Financial's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. BayFirst Financial managed to grow EPS by 8.5% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

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. Our analysis has highlighted that BayFirst Financial's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. While we note BayFirst Financial achieved similar EBIT margins to last year, revenue grew by a solid 11% to US$84m. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

BayFirst Financial isn't a huge company, given its market capitalisation of US$63m. That makes it extra important to check on its balance sheet strength.

Are BayFirst 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.

A great takeaway for shareholders is that company insiders within BayFirst Financial have collectively spent US$15k acquiring shares in the company. While this investment may be modest, it is great considering the lack of insider selling.

Should You Add BayFirst Financial To Your Watchlist?

One positive for BayFirst Financial is that it is growing EPS. That's nice to see. While some companies are struggling to grow EPS, BayFirst Financial seems free from that morose affliction. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. You still need to take note of risks, for example - BayFirst Financial has 2 warning signs (and 1 which can't be ignored) we think you should know about.

Keen growth investors love to see insider activity. Thankfully, BayFirst Financial isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by high insider ownership.

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.