How Does Lakeland Financial Corporation’s (NASDAQ:LKFN) Earnings Growth Stack Up Against Industry Performance?
After looking at Lakeland Financial Corporation’s (NASDAQ:LKFN) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 Lakeland Financial
How Did LKFN’s Recent Performance Stack Up Against Its Past?
I look at 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 stocks on a similar basis, using the most relevant data points. For Lakeland Financial, its latest earnings (trailing twelve month) is $59.2M, which, in comparison to the previous year’s figure, has increased by 16.48%. Since these figures are somewhat short-term thinking, I’ve computed an annualized five-year figure for LKFN’s net income, which stands at $41.2M. This suggests that, generally, Lakeland Financial has been able to increasingly improve its bottom line over the last couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is solely due to industry tailwinds, or if Lakeland Financial has experienced some company-specific growth. Over the last few years, Lakeland Financial increased its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US banks industry has been growing its average earnings by double-digit 10.16% in the previous year, and a more muted 8.51% over the previous few years. This shows that any tailwind the industry is benefiting from, Lakeland Financial is able to leverage this to its advantage.
What does this mean?
Though Lakeland Financial’s past data is helpful, it is only one aspect of my investment thesis. While Lakeland Financial has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Lakeland Financial to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for LKFN’s future growth? Take a look at our free research report of analyst consensus for LKFN’s outlook.
2. Financial Health: Is LKFN’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 30 September 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.
