Understanding America First Multifamily Investors LP’s (NASDAQ:ATAX) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how America First Multifamily Investors is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.
Were ATAX’s earnings stronger than its past performances and the industry?
ATAX’s trailing twelve-month earnings (from 30 June 2018) of US$24.6m has jumped 34.3% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 27.6%, indicating the rate at which ATAX is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely attributable to an industry uplift, or if America First Multifamily Investors has experienced some company-specific growth.
Over the last couple of years, America First Multifamily Investors expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time.
Eyeballing growth from a sector-level, the US mortgage industry has been growing, albeit, at a muted single-digit rate of 9.4% over the prior year, and a substantial 13.6% over the last five years. This growth is a median of profitable companies of 25 Mortgage companies in US including BV Financial, FSB Bancorp and Bancorp 34. This shows that any uplift the industry is benefiting from, America First Multifamily Investors is able to leverage this to its advantage.
In terms of returns from investment, America First Multifamily Investors has fallen short of achieving a 20% return on equity (ROE), recording 7.5% instead. However, its return on assets (ROA) of 2.4% exceeds the US Mortgage industry of 0.7%, indicating America First Multifamily Investors has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for America First Multifamily Investors’s debt level, has increased over the past 3 years from 2.0% to 2.4%.
What does this mean?
America First Multifamily Investors’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as America First Multifamily Investors gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research America First Multifamily Investors to get a more holistic view of the stock by looking at:
- Financial Health: Are ATAX’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.
- Valuation: What is ATAX 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 ATAX is currently mispriced by the market.
- 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 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.