After looking at Riverview Bancorp Inc’s (NASDAQ:RVSB) latest earnings announcement (30 June 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Riverview Bancorp’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
How Well Did RVSB Perform?
RVSB’s trailing twelve-month earnings (from 30 June 2018) of US$12m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -4.5%, indicating the rate at which RVSB is growing has accelerated. What’s enabled this growth? Let’s see whether it is solely owing to industry tailwinds, or if Riverview Bancorp has seen some company-specific growth.
In the past couple of years, Riverview Bancorp top-line expansion has outpaced earnings and the growth rate of expenses. Though this brought about a margin contraction, it has cushioned Riverview Bancorp’s earnings contraction.
Looking at growth from a sector-level, the US mortgage industry has been growing, albeit, at a muted single-digit rate of 9.5% over the prior year, and a substantial 12% 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 shows that any uplift the industry is deriving benefit from, Riverview Bancorp is capable of leveraging this to its advantage.
In terms of returns from investment, Riverview Bancorp has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 1.1% exceeds the US Mortgage industry of 0.7%, indicating Riverview Bancorp has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Riverview Bancorp’s debt level, has increased over the past 3 years from 6.1% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 31% to 24% over the past 5 years.
What does this mean?
Though Riverview Bancorp’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Riverview Bancorp to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RVSB’s future growth? Take a look at our free research report of analyst consensus for RVSB’s outlook.
- Financial Health: Are RVSB’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.