Did Equitable Group Inc’s (TSE:EQB) Recent Earnings Growth Beat The Trend?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Equitable Group Inc (TSX:EQB) useful as an attempt to give more color around how Equitable Group is currently performing. Check out our latest analysis for Equitable Group
Commentary On EQB’s Past Performance
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess various companies in a uniform manner using the most relevant data points. For Equitable Group, its most recent bottom-line (trailing twelve month) is CA$152.63M, which compared to last year’s figure, has grown by a somewhat soft 2.47%. Since these figures are fairly myopic, I have determined an annualized five-year value for Equitable Group’s net income, which stands at CA$104.19M This means that, on average, Equitable Group has been able to steadily improve its net income over the past few years as well.
What’s enabled this growth? Let’s see if it is solely because of an industry uplift, or if Equitable Group has experienced some company-specific growth. The hike in earnings seems to be supported by a robust top-line increase overtaking its growth rate of expenses. Though this brought about a margin contraction, it has made Equitable Group more profitable. Viewing growth from a sector-level, the Canadian mortgage industry has been growing, albeit, at a unexciting single-digit rate of 3.45% over the past year, and a substantial 14.48% over the past five years. This suggests that whatever near-term headwind the industry is enduring, it’s hitting Equitable Group harder than its peers.
What does this mean?
Equitable Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Equitable Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Equitable Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for EQB’s future growth? Take a look at our free research report of analyst consensus for EQB’s outlook.
Financial Health: Is EQB’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.
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 March 2018. 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.
