After reading Columbia Banking System Inc’s (NASDAQ:COLB) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past 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 a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Columbia Banking System
Could COLB beat the long-term trend and outperform its industry?
For the most up-to-date info, I 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 enables me to examine various companies on a similar basis, using new information. For Columbia Banking System, its most recent bottom-line (trailing twelve month) is US$111.32M, which compared to the previous year’s figure, has risen by a somewhat soft 7.76%. Since these figures are fairly nearsighted, I’ve estimated an annualized five-year value for COLB’s earnings, which stands at US$75.93M This means that, generally, Columbia Banking System has been able to steadily improve its bottom line over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is only because of an industry uplift, or if Columbia Banking System has seen some company-specific growth. In the last couple of years, Columbia Banking System grew its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the US banks industry has been growing, albeit, at a unexciting single-digit rate of 4.90% over the prior year, and 8.03% over the previous five years. This shows that any recent headwind the industry is enduring, Columbia Banking System is less exposed compared to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Columbia Banking System to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for COLB’s future growth? Take a look at our free research report of analyst consensus for COLB’s outlook.
- Financial Health: Is COLB’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 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.