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OptimumBank Holdings Inc (NASDAQ:OPHC): Does The -48.74% Earnings Drop Reflect A Longer Term Trend?

Mercedes Harden

Assessing OptimumBank Holdings Inc’s (NASDAQ:OPHC) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess OPHC’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for OptimumBank Holdings

How Well Did OPHC Perform?

For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine various companies on a more comparable basis, using the latest information. For OptimumBank Holdings, its most recent trailing-twelve-month earnings is -US$589.00K, which, against last year’s level, has become more negative. Given that these figures may be fairly myopic, I have estimated an annualized five-year value for OPHC’s net income, which stands at -US$2.35M. This means though net income is negative, it has become less negative over the years.

NasdaqCM:OPHC Income Statement Apr 10th 18

We can further assess OptimumBank Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade OptimumBank Holdings’s top-line has increased by 12.02% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Looking at growth from a sector-level, the US banks industry has been growing, albeit, at a subdued single-digit rate of 3.33% over the past twelve months, and 8.07% over the past half a decade. This means any recent headwind the industry is facing, it’s hitting OptimumBank Holdings harder than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues OptimumBank Holdings may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research OptimumBank Holdings to get a more holistic view of the stock by looking at:

  • 1. Financial Health: Is OPHC’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.
  • 2. 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.