Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Medallion Financial Corp’s (NASDAQ:MFIN) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Medallion Financial
Did MFIN perform worse than its track record and industry?
I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess many different companies on a similar basis, using new information. For Medallion Financial, its latest earnings (trailing twelve month) is US$278.00K, which, relative to the previous year’s figure, has plunged by a significant -98.82%. Since these figures are fairly nearsighted, I have calculated an annualized five-year value for MFIN’s net income, which stands at US$22.24M This doesn’t look much better, as earnings seem to have consistently been diminishing over the longer term.
Why is this? Let’s examine what’s transpiring with margins and if the rest of the industry is experiencing the hit as well. In the past few years, Medallion Financial has, on average, delivered negative top- and bottom-line growth. As revenues declined by more, expenses have been slashed in order to maintain margins – not the most sustainable operating activity. Inspecting growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 15.39% over the prior twelve months, and 10.93% over the past half a decade. This means that any uplift the industry is deriving benefit from, Medallion Financial has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Generally companies that endure a drawn out period of decline in earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I suggest you continue to research Medallion Financial to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for MFIN’s future growth? Take a look at our free research report of analyst consensus for MFIN’s outlook.
- 2. Financial Health: Is MFIN’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.