Understanding Independent Bank Corporation’s (NASDAQ:IBCP) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Independent Bank is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for Independent Bank
How Did IBCP’s Recent Performance Stack Up Against Its Past?
I prefer to use the ‘latest twelve-month’ data, 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 method allows me to examine different stocks on a similar basis, using the most relevant data points. For Independent Bank, its most recent trailing-twelve-month earnings is $24.6M, which, in comparison to the previous year’s figure, has risen by a fairly subdued 9.51%. Given that these values may be somewhat nearsighted, I have created an annualized five-year value for Independent Bank’s earnings, which stands at $21.3M. This means on average, Independent Bank has been able to steadily grow its bottom line over the last few years as well.
What’s enabled this growth? Let’s see whether it is merely attributable to an industry uplift, or if Independent Bank has seen some company-specific growth. Over the last few years, Independent Bank increased bottom-line, while its top-line fell, by successfully managing its costs. This resulted in to a margin expansion and profitability over time. Inspecting growth from a sector-level, the US banks industry has been growing, albeit, at a muted single-digit rate of 9.80% in the prior year, and 8.51% over the past five. This suggests that whatever tailwind the industry is enjoying, Independent Bank has not been able to realize the gains unlike its average peer.
What does this mean?
Though Independent Bank’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Independent Bank gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Independent Bank to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for IBCP’s future growth? Take a look at our free research report of analyst consensus for IBCP’s outlook.
2. Financial Health: Is IBCP’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 30 September 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.