After looking at FS Bancorp Inc’s (NASDAQ:FSBW) latest earnings update (31 March 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. 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 an important aspect. In this article I briefly touch on my key findings. Check out our latest analysis for FS Bancorp
How Well Did FSBW Perform?
FSBW’s trailing twelve-month earnings (from 31 March 2018) of US$15.81m has jumped 38.34% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 27.57%, indicating the rate at which FSBW is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at whether it is solely a result of an industry uplift, or if FS Bancorp has seen some company-specific growth.
In 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 growing, albeit, at a unexciting single-digit rate of 8.88% over the prior twelve months, and a substantial 13.87% over the last five years. This shows that any uplift the industry is enjoying, FS Bancorp is able to amplify this to its advantage.
In terms of returns from investment, FS Bancorp has not invested its equity funds well, leading to a 12.61% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 1.52% exceeds the US Mortgage industry of 0.66%, indicating FS Bancorp has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for FS Bancorp’s debt level, has increased over the past 3 years from 8.19% to 11.67%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While FS Bancorp has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research FS Bancorp to get a better picture of the stock by looking at:
- 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.
- 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.
- 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 March 2018. 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.