Did Timbercreek Financial Corporation’s (TSE:TF) Recent Earnings Growth Beat The Trend?
Understanding Timbercreek Financial Corporation’s (TSX:TF) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Timbercreek Financial is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for Timbercreek Financial
Commentary On TF’s Past Performance
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 enables me to analyze various companies on a more comparable basis, using the latest information. For Timbercreek Financial, its most recent bottom-line (trailing twelve month) is CA$52.4M, which, in comparison to the previous year’s level, has risen by 31.58%. Since these figures may be somewhat short-term thinking, I’ve calculated an annualized five-year figure for Timbercreek Financial’s earnings, which stands at CA$24.3M. This means generally, Timbercreek Financial has been able to increasingly grow its earnings over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is only attributable to industry tailwinds, or if Timbercreek Financial has experienced some company-specific growth. Over the past couple of years, Timbercreek Financial increased its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the Canadian mortgage industry has been relatively flat in terms of earnings growth over the previous few years. This means that whatever recent headwind the industry is experiencing, the impact on Timbercreek Financial has been softer relative to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Timbercreek Financial has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Timbercreek Financial to get a more holistic view of the stock by looking at:
1. Financial Health: Is TF’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 TF 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 TF 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 30 September 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.
