Should FHB Jelzálogbank Nyrt’s (BUSE:FHB) Recent Earnings Decline Worry You?
After looking at FHB Jelzálogbank Nyrt’s (BUSE:FHB) latest earnings announcement (30 June 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. See our latest analysis for FHB Jelzálogbank Nyrt
Was FHB’s recent earnings decline indicative of a tough track record?
I like to use 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 new information. For FHB Jelzálogbank Nyrt, its most recent earnings (trailing twelve month) is -FT9.34B, which compared to the prior year’s level, has become more negative. Since these values are somewhat short-term, I have computed an annualized five-year value for FHB’s earnings, which stands at -FT6.16B. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.
We can further assess FHB Jelzálogbank Nyrt’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years FHB Jelzálogbank Nyrt’s top-line has increased by a mere 9.77%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the HU mortgage industry has been relatively flat in terms of earnings growth in the past year, levelling off from a notable 12.30% over the past half a decade. This means that any near-term headwind the industry is experiencing, it’s hitting FHB Jelzálogbank Nyrt harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues FHB Jelzálogbank Nyrt may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research FHB Jelzálogbank Nyrt to get a more holistic view of the stock by looking at:
1. Financial Health: Is FHB’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.
2. 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 June 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.
