After looking at BCB Bancorp Inc’s (NASDAQ:BCBP) latest earnings update (30 September 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. 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 an important aspect. In this article I briefly touch on my key findings. View our latest analysis for BCB Bancorp
How Well Did BCBP Perform?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 companies on a similar basis, using new information. For BCB Bancorp, the most recent earnings is $10.4M, which, against the previous year’s level, has moved up by a significant 86.67%. Given that these values may be fairly nearsighted, I’ve computed an annualized five-year value for BCBP’s net income, which stands at $6.7M. This means on average, BCB Bancorp has been able to gradually raise its profits over the last couple of years as well.
What’s the driver of this growth? Well, let’s take a look at if it is only owing to industry tailwinds, or if BCB Bancorp has experienced some company-specific growth. Over the past few years, BCB Bancorp top-line expansion has outstripped earnings and the growth rate of expenses. Though this has caused a margin contraction, it has cushioned BCB Bancorp’s earnings contraction. Inspecting growth from a sector-level, the US banks industry has been growing its average earnings by double-digit 10.03% over the previous year, and a more muted 8.99% over the past couple of years. This means any uplift the industry is gaining from, BCB Bancorp is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While BCB Bancorp 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 BCB Bancorp to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BCBP’s future growth? Take a look at our free research report of analyst consensus for BCBP’s outlook.
2. Financial Health: Is BCBP’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.