How Central Federal Corporation’s (CFBK) EPS Dropped -69.7%, Did Its Industry Show Weakness Too?
Measuring Central Federal Corporation’s (NASDAQ:CFBK) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CFBK’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for CFBK
Was CFBK weak performance lately part of a long-term decline?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess different companies on a more comparable basis, using the most relevant data points. Central Federal’s most recent bottom-line is $1.2M, which compared to last year’s level, has sunken by a significant -69.28%. Given that these figures are fairly short-term thinking, I’ve computed an annualized five-year figure for Central Federal’s earnings, which stands at -$0.7M. This suggests that although earnings declined against last year, over the long run, Central Federal’s earnings have been growing on average.
What’s the driver of this growth? Well, let’s take a look at if it is merely owing to industry tailwinds, or if Central Federal has experienced some company-specific growth. Over the past few years, Central Federal expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the US thrifts and mortgage finance industry has been growing its average earnings by double-digit 11.00% in the previous twelve months, and 13.84% over the previous few years. This means any tailwind the industry is deriving benefit from, Central Federal has not been able to leverage it as much as its industry peers.
What does this mean?
Though Central Federal’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 impacting its business. I recommend you continue to research Central Federal to get a more holistic view of the stock by looking at:
1. Financial Health: Is CFBK’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. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
