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Did Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France’s (EPA:CAF) Recent Earnings Growth Beat The Trend?

Audra Newberry

For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France (ENXTPA:CAF) useful as an attempt to give more color around how Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France is currently performing. See our latest analysis for Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France

How CAF fared against its long-term earnings performance and its industry

To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, 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 technique enables me to examine different stocks on a more comparable basis, using the most relevant data points. For Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France, its most recent earnings (trailing twelve month) is €256.11M, which, relative to the previous year’s level, has grown by a fairly soft 2.39%. Given that these values may be relatively short-term, I have computed an annualized five-year figure for Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France’s net income, which stands at €272.30M This means though earnings growth from last year was positive, over the longer term, Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France’s earnings have been declining on average.

ENXTPA:CAF Income Statement Apr 23rd 18

What could be happening here? Well, let’s take a look at what’s occurring with margins and whether the entire industry is facing the same headwind. Revenue growth in the last couple of years, has been positive, yet earnings growth has been falling. This suggest that Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France has been growing expenses, which is hurting margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the FR banks industry has been relatively flat in terms of earnings growth over the past couple of years. This means that whatever recent headwind the industry is facing, Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France is relatively better-cushioned than its peers.

What does this mean?

Though Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook.

I recommend you continue to research Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile-de-France to get a better picture of the stock by looking at:

  1. Financial Health: Is CAF’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 CAF 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 CAF 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 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.