After looking at Independent Bank Corp’s (NASDAQ:INDB) latest earnings update (31 December 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. See our latest analysis for Independent Bank
Did INDB’s recent earnings growth beat the long-term trend and the industry?
I prefer to use data from the most recent 12 months, 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 many different companies in a uniform manner using new information. For Independent Bank, its most recent trailing-twelve-month earnings is US$87.20M, which, in comparison to the prior year’s level, has risen by 13.77%. Given that these figures are fairly myopic, I’ve determined an annualized five-year value for Independent Bank’s net income, which stands at US$58.55M This means that, generally, Independent Bank has been able to steadily grow its profits over the past few years as well.
How has it been able to do this? Let’s take a look at whether it is only attributable to industry tailwinds, or if Independent Bank has seen some company-specific growth. Over the last couple of years, Independent Bank increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Scanning growth from a sector-level, the US banks industry has been growing, albeit, at a subdued single-digit rate of 3.96% in the past year, and 8.53% over the past five years. This means that any recent headwind the industry is experiencing, the impact on Independent Bank has been softer relative to its peers.
What does this mean?
Independent Bank’s track record can be a valuable insight into its earnings performance, but it certainly 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? You should continue to research Independent Bank to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for INDB’s future growth? Take a look at our free research report of analyst consensus for INDB’s outlook.
- 2. Financial Health: Is INDB’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.