After reading Emclaire Financial Corp’s (NASDAQ:EMCF) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Emclaire Financial
How EMCF fared against its long-term earnings performance and its industry
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 allows me to examine different stocks on a more comparable basis, using the latest information. For Emclaire Financial, its most recent trailing-twelve-month earnings is $4.9M, which, relative to the previous year’s level, has risen by 31.90%. Given that these figures are fairly short-term thinking, I’ve computed an annualized five-year figure for Emclaire Financial’s net income, which stands at $3.6M. This means that, generally, Emclaire Financial has been able to gradually improve its earnings over the past couple of years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is solely attributable to an industry uplift, or if Emclaire Financial has seen some company-specific growth. In the last few years, Emclaire Financial expanded its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US banks industry has been growing, albeit, at a muted single-digit rate of 9.80% over the prior twelve months, and 8.51% over the previous five years. This means any tailwind the industry is deriving benefit from, Emclaire Financial is able to leverage this to its advantage.
What does this mean?
Though Emclaire Financial’s past data is helpful, it is only one aspect of my investment thesis. While Emclaire Financial has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Emclaire Financial to get a more holistic view of the stock by looking at:
1. Financial Health: Is EMCF’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. Valuation: What is EMCF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EMCF is currently mispriced by the market.
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 30 September 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.