After reading Independent Bank Group Inc’s (NASDAQ:IBTX) 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. View our latest analysis for Independent Bank Group
How IBTX fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess different companies on a more comparable basis, using the most relevant data points. For Independent Bank Group, its most recent trailing-twelve-month earnings is US$75.79M, which compared to the previous year’s level, has risen by 43.94%. Given that these values may be fairly short-term, I’ve created an annualized five-year figure for Independent Bank Group’s earnings, which stands at US$33.58M This suggests that, on average, Independent Bank Group has been able to gradually improve its net income over the last couple of years as well.
How has it been able to do this? Let’s take a look at if it is solely attributable to an industry uplift, or if Independent Bank Group has seen some company-specific growth. Over the last couple of years, Independent Bank Group increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US banks industry has been growing, albeit, at a unexciting single-digit rate of 3.38% in the past year, and 8.11% over the last five years. This means any near-term headwind the industry is enduring, the impact on Independent Bank Group has been softer relative to its peers.
What does this mean?
Independent Bank Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Independent Bank Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Independent Bank Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for IBTX’s future growth? Take a look at our free research report of analyst consensus for IBTX’s outlook.
- Financial Health: Is IBTX’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.