After looking at Sandy Spring Bancorp Inc’s (NASDAQ:SASR) 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Sandy Spring Bancorp’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for SASR
Were SASR’s earnings stronger than its past performances and the industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine different companies on a similar basis, using the latest information. Sandy Spring Bancorp’s most recent earnings is $58M, which, relative to the previous year’s figure, has increased by 22.04%. Since these figures may be fairly nearsighted, I have computed an annualized five-year figure for Sandy Spring Bancorp’s net income, which stands at $40M. This means that, on average, Sandy Spring Bancorp has been able to steadily grow its profits over the last few years as well.
How has it been able to do this? Well, let’s take a look at whether it is only attributable to an industry uplift, or if Sandy Spring Bancorp has experienced some company-specific growth. In the past couple of years, Sandy Spring Bancorp expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the US banks industry has been growing its average earnings by double-digit 12.54% over the past year, and a more subdued 9.71% over the previous five years. This means that whatever uplift the industry is deriving benefit from, Sandy Spring Bancorp is capable of amplifying this to its advantage.
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? You should continue to research Sandy Spring Bancorp to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SASR’s future growth? Take a look at our free research report of analyst consensus for SASR’s outlook.
2. Financial Health: Is SASR’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.