In this commentary, I will examine The First Bancorp Inc’s (NASDAQ:FNLC) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the banks industry performed. As an investor, I find it beneficial to assess FNLC’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for First Bancorp
How Well Did FNLC Perform?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 blend allows me to analyze different stocks on a more comparable basis, using the latest information. For First Bancorp, its most recent earnings (trailing twelve month) is US$19.59M, which compared to the previous year’s level, has increased by a fairly soft 8.77%. Given that these values are fairly myopic, I have calculated an annualized five-year value for FNLC’s net income, which stands at US$14.53M This means that, generally, First Bancorp has been able to increasingly grow its earnings over the last couple of years as well.
What’s the driver of this growth? Let’s see if it is only a result of industry tailwinds, or if First Bancorp has experienced some company-specific growth. Over the past couple of years, First Bancorp expanded its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the US banks industry has been growing, albeit, at a muted single-digit rate of 3.40% in the previous year, and 8.11% over the past five. This means any recent headwind the industry is experiencing, First Bancorp is relatively better-cushioned than its peers.
What does this mean?
Though First Bancorp’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as First Bancorp gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research First Bancorp to get a better picture of the stock by looking at:
- Financial Health: Is FNLC’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.
- Valuation: What is FNLC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FNLC is currently mispriced by the market.
- 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.