For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Southside Bancshares Inc (NASDAQ:SBSI) useful as an attempt to give more color around how Southside Bancshares is currently performing. View our latest analysis for Southside Bancshares
Did SBSI’s recent earnings growth beat the long-term trend and the industry?
For the purpose of this commentary, I like 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 blend enables me to analyze different companies on a similar basis, using new information. For Southside Bancshares, its latest earnings (trailing twelve month) is US$54.31M, which, relative to the previous year’s figure, has risen by 10.06%. Since these figures may be somewhat short-term thinking, I have computed an annualized five-year value for SBSI’s net income, which stands at US$39.73M This suggests that, generally, Southside Bancshares has been able to consistently grow its earnings over the last couple of years as well.
What’s the driver of this growth? Let’s see if it is solely a result of an industry uplift, or if Southside Bancshares has seen some company-specific growth. The climb in earnings seems to be bolstered by a solid top-line increase beating its growth rate of costs. Though this brought about a margin contraction, it has made Southside Bancshares more profitable. Viewing growth from a sector-level, the US banks industry has been growing, albeit, at a muted single-digit rate of 3.80% over the previous year, and 8.38% over the past five years. This means that whatever near-term headwind the industry is facing, Southside Bancshares is relatively better-cushioned than its peers.
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 Southside Bancshares to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for SBSI’s future growth? Take a look at our free research report of analyst consensus for SBSI’s outlook.
- 2. Financial Health: Is SBSI’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.