Assessing Federated Investors Inc’s (NYSE:FII) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess FII’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for Federated Investors
Did FII beat its long-term earnings growth trend and its industry?
I like to 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 assess different companies on a more comparable basis, using new information. For Federated Investors, its most recent trailing-twelve-month earnings is US$279.92M, which, against the prior year’s level, has jumped up by 39.07%. Since these values are somewhat nearsighted, I have computed an annualized five-year value for FII’s net income, which stands at US$171.69M This suggests that, generally, Federated Investors has been able to steadily improve its profits over the past couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is solely owing to an industry uplift, or if Federated Investors has seen some company-specific growth. In the last few years, Federated Investors grew its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 15.70% over the previous twelve months, and 10.52% over the past half a decade. This means whatever tailwind the industry is gaining from, Federated Investors is capable of leveraging this to its advantage.
What does this mean?
Though Federated Investors’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Federated Investors gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Federated Investors to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for FII’s future growth? Take a look at our free research report of analyst consensus for FII’s outlook.
- 2. Financial Health: Is FII’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 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.