For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Northfield Bancorp Inc (Staten Island NY)’s (NASDAQ:NFBK) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for Northfield Bancorp (Staten Island NY)
Was NFBK’s recent earnings decline indicative of a tough track record?
NFBK’s trailing twelve-month earnings (from 31 March 2018) of US$25.27m has declined by -22.07% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 10.04%, indicating the rate at which NFBK is growing has slowed down. Why could this be happening? Let’s examine what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
Revenue growth over the last few years, has been positive, however, earnings growth has failed to keep up meaning Northfield Bancorp (Staten Island NY) has been growing its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the US mortgage industry has been growing, albeit, at a subdued single-digit rate of 8.64% over the previous year, and a substantial 14.14% over the past five. This means any uplift the industry is deriving benefit from, Northfield Bancorp (Staten Island NY) has not been able to realize the gains unlike its average peer.
In terms of returns from investment, Northfield Bancorp (Staten Island NY) has not invested its equity funds well, leading to a 3.93% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 0.62% is below the US Mortgage industry of 0.64%, indicating Northfield Bancorp (Staten Island NY)’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Northfield Bancorp (Staten Island NY)’s debt level, has increased over the past 3 years from 2.47% to 5.22%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Northfield Bancorp (Staten Island NY) to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NFBK’s future growth? Take a look at our free research report of analyst consensus for NFBK’s outlook.
- Financial Health: Is NFBK’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.