For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on BankFinancial Corporation (NASDAQ:BFIN) useful as an attempt to give more color around how BankFinancial is currently performing.
Did BFIN beat its long-term earnings growth trend and its industry?
BFIN recently turned a profit of US$12.7m (most recent trailing twelve-months) compared to its average loss of -US$751.2k over the past five years.
Over the last few years, BankFinancial grew its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time.
Looking at growth from a sector-level, the US mortgage industry has been growing, albeit, at a subdued single-digit rate of 9.4% in the prior twelve months, and a substantial 13.6% over the last five years. This growth is a median of profitable companies of 25 Mortgage companies in US including BV Financial, FSB Bancorp and Bancorp 34. This means that any uplift the industry is profiting from, BankFinancial is able to amplify this to its advantage.
In terms of returns from investment, BankFinancial has fallen short of achieving a 20% return on equity (ROE), recording 6.6% instead. However, its return on assets (ROA) of 0.8% exceeds the US Mortgage industry of 0.7%, indicating BankFinancial has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for BankFinancial’s debt level, has increased over the past 3 years from 5.8% to 8.7%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While BankFinancial has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research BankFinancial to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BFIN’s future growth? Take a look at our free research report of analyst consensus for BFIN’s outlook.
- Financial Health: Are BFIN’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.
- 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 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.