After looking at Southside Bancshares Inc’s (NASDAQ:SBSI) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Southside Bancshares
Could SBSI beat the long-term trend and outperform its industry?
I like to 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 method allows me to examine different stocks on a similar basis, using new information. Southside Bancshares’s most recent earnings is $55.6M, which, relative to the previous year’s figure, has risen by 12.30%. Given that these values are fairly myopic, I’ve created an annualized five-year figure for Southside Bancshares’s earnings, which stands at $39.2M. This suggests that, on average, Southside Bancshares has been able to increasingly grow its earnings over the past few years as well.
What’s enabled this growth? Let’s take a look at if it is solely a result of industry tailwinds, or if Southside Bancshares has experienced some company-specific growth. The ascend in earnings seems to be propelled by a solid top-line increase overtaking its growth rate of expenses. Though this resulted in a margin contraction, it has made Southside Bancshares more profitable. Scanning growth from a sector-level, the US banks industry has been growing, albeit, at a muted single-digit rate of 9.80% in the previous year, and 8.99% over the past five. This means any tailwind the industry is profiting from, Southside Bancshares is capable of leveraging this to its advantage.
What does this mean?
Though Southside Bancshares’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Southside Bancshares to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SBSI’s future growth? Take a look at our free research report of analyst consensus for SBSI’s outlook.
2. Financial Health: Is SBSI’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.
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.