When IF Bancorp Inc’s (NASDAQ:IROQ) announced its latest earnings (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were IF Bancorp’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not IROQ actually performed well. Below is a quick commentary on how I see IROQ has performed. View our latest analysis for IF Bancorp
Was IROQ’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to analyze various companies on a similar basis, using the most relevant data points. For IF Bancorp, its latest earnings (trailing twelve month) is $3.6M, which, against the previous year’s level, has fallen by -11.77%. Given that these values are somewhat short-term, I’ve determined an annualized five-year figure for IROQ’s net income, which stands at $3.2M. This means that although earnings declined from last year, over time, IF Bancorp’s profits have been increasing on average.
What’s the driver of this growth? Let’s see whether it is only attributable to an industry uplift, or if IF Bancorp has seen some company-specific growth. Over the past few years, IF Bancorp expanded its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Looking at growth from a sector-level, the US thrifts and mortgage finance industry has been growing its average earnings by double-digit 11.49% over the previous year, and 14.84% over the previous five years. This shows that any tailwind the industry is deriving benefit from, IF Bancorp has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research IF Bancorp to get a better picture of the stock by looking at:
1. Financial Health: Is IROQ’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Valuation: What is IROQ worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether IROQ is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.