When Broadway Financial Corporation’s (NASDAQ:BYFC) 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 Broadway Financial’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not BYFC actually performed well. Below is a quick commentary on how I see BYFC has performed. View our latest analysis for Broadway Financial
Did BYFC perform worse than its track record and industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to analyze various companies in a uniform manner using new information. For Broadway Financial, its most recent earnings (trailing twelve month) is $4.5M, which compared to the prior year’s figure, has plunged by a large -35.54%. Since these values may be fairly nearsighted, I have created an annualized five-year figure for BYFC’s net income, which stands at -$0.1M. This suggests that while earnings declined against the prior year, over the longer term, Broadway Financial’s earnings have been growing on average.
What’s enabled this growth? Let’s take a look at whether it is only a result of industry tailwinds, or if Broadway Financial has seen some company-specific growth. Over the past few years, Broadway Financial expanded its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Scanning 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 past twelve months, and 14.84% over the previous few years. This means whatever tailwind the industry is deriving benefit from, Broadway Financial has not been able to reap as much as its average peer.
What does this mean?
Though Broadway Financial’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research Broadway Financial to get a better picture of the stock by looking at:
1. Financial Health: Is BYFC’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 BYFC 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 BYFC 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.