After looking at FS Bancorp Inc’s (NASDAQ:FSBW) latest earnings announcement (31 December 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 FS Bancorp’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for FS Bancorp
Could FSBW beat the long-term trend and outperform its industry?
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 technique enables me to assess different companies in a uniform manner using the most relevant data points. For FS Bancorp, its most recent bottom-line (trailing twelve month) is US$14.09M, which, relative to the prior year’s level, has moved up by 34.16%. Since these values are fairly short-term, I’ve created an annualized five-year value for FS Bancorp’s earnings, which stands at US$6.26M This shows that, on average, FS Bancorp has been able to increasingly improve its earnings over the past couple of years as well.
What’s enabled this growth? Well, let’s take a look at whether it is merely owing to an industry uplift, or if FS Bancorp has seen some company-specific growth. Over the last couple of years, FS Bancorp grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US mortgage industry has been relatively flat in terms of earnings growth in the previous year, settling down from a robust 12.88% over the past five years. This shows that any near-term headwind the industry is facing, FS Bancorp is less exposed compared to its peers.
What does this mean?
FS Bancorp’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as FS Bancorp gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research FS Bancorp to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for FSBW’s future growth? Take a look at our free research report of analyst consensus for FSBW’s outlook.
- 2. Financial Health: Is FSBW’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.