After looking at Meridian Bancorp Inc’s (NASDAQ:EBSB) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for Meridian Bancorp
Commentary On EBSB’s Past Performance
I prefer to use data from the most recent 12 months, 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 technique enables me to assess various companies on a more comparable basis, using the latest information. For Meridian Bancorp, its most recent earnings (trailing twelve month) is US$42.95M, which, in comparison to last year’s figure, has risen by 25.61%. Given that these figures are relatively nearsighted, I have estimated an annualized five-year figure for Meridian Bancorp’s earnings, which stands at US$22.18M This shows that, generally, Meridian Bancorp has been able to steadily improve its earnings over the past few years as well.
How has it been able to do this? Let’s take a look at whether it is merely owing to industry tailwinds, or if Meridian Bancorp has experienced some company-specific growth. In the last few years, Meridian Bancorp grew its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the US mortgage industry has been relatively flat in terms of earnings growth over the previous twelve months, settling down from a notable 12.41% over the past five years. This means any near-term headwind the industry is enduring, the impact on Meridian Bancorp has been softer relative to its peers.
What does this mean?
Though Meridian Bancorp’s past data is helpful, it is only one aspect of my investment thesis. While Meridian Bancorp has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Meridian Bancorp to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EBSB’s future growth? Take a look at our free research report of analyst consensus for EBSB’s outlook.
- Financial Health: Is EBSB’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.
- 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 31 December 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.