Examining Carolina Financial Corporation’s (NASDAQ:CARO) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CARO’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. Check out our latest analysis for Carolina Financial
How Well Did CARO Perform?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess different companies on a similar basis, using new information. For Carolina Financial, its most recent earnings (trailing twelve month) is US$28.57M, which, in comparison to last year’s figure, has moved up by an impressive 62.58%. Since these figures are fairly myopic, I have calculated an annualized five-year figure for CARO’s earnings, which stands at US$15.12M This means that, generally, Carolina Financial has been able to consistently grow its profits over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is solely due to industry tailwinds, or if Carolina Financial has seen some company-specific growth. In the past couple of years, Carolina Financial expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Scanning growth from a sector-level, the US banks industry has been growing, albeit, at a subdued single-digit rate of 3.96% over the past year, and 8.53% over the previous five years. This shows that whatever near-term headwind the industry is enduring, the impact on Carolina Financial has been softer relative to its peers.
What does this mean?
Though Carolina Financial’s past data is helpful, it is only one aspect of my investment thesis. While Carolina Financial 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 Carolina Financial to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for CARO’s future growth? Take a look at our free research report of analyst consensus for CARO’s outlook.
- 2. Financial Health: Is CARO’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.