After reading MMA Capital Management LLC’s (NASDAQ:MMAC) latest earnings update (30 June 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether MMAC has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for MMA Capital Management
How Well Did MMAC Perform?
For the purpose of this commentary, I like 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 allows me to analyze different companies in a uniform manner using the latest information. MMA Capital Management’s latest earnings is $23M, which, relative to the prior year’s figure, has fallen by -29.35%. Given that these figures may be somewhat nearsighted, I have calculated an annualized five-year figure for MMA Capital Management’s earnings, which stands at $23M. This suggests that although earnings declined against last year, over the past couple of years, MMA Capital Management’s earnings have been increasing on average.
What’s enabled this growth? Let’s see if it is merely attributable to an industry uplift, or if MMA Capital Management has seen some company-specific growth. In the last few years, MMA Capital Management expanded bottom-line, while its top-line declined, by effectively controlling its costs. This brought about to 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 13.21% over the previous year, and 15.72% over the past five. This shows that whatever tailwind the industry is benefiting from, MMA Capital Management has not been able to reap as much as its industry peers.
What does this mean?
MMA Capital Management’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have volatile earnings, can have many factors impacting its business. I suggest you continue to research MMA Capital Management to get a better picture of the stock by looking at:
1. Financial Health: Is MMAC’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 MMAC 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 MMAC 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 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.