When TowneBank (NASDAQ:TOWN) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how TowneBank performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see TOWN has performed. Check out our latest analysis for TowneBank
Commentary On TOWN’s Past Performance
I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to assess many different companies on a similar basis, using the latest information. For TowneBank, its most recent earnings (trailing twelve month) is US$87.66M, which, relative to the previous year’s figure, has climbed up by 30.35%. Given that these values may be relatively short-term, I’ve determined an annualized five-year figure for TowneBank’s net income, which stands at US$47.04M This suggests that, on average, TowneBank has been able to consistently grow its earnings over the last couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is solely owing to an industry uplift, or if TowneBank has seen some company-specific growth. In the last couple of years, TowneBank grew its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the US banks industry has been growing, albeit, at a muted single-digit rate of 3.75% in the past year, and 8.38% over the last five years. This suggests that any near-term headwind the industry is enduring, the impact on TowneBank has been softer relative to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as TowneBank gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research TowneBank to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TOWN’s future growth? Take a look at our free research report of analyst consensus for TOWN’s outlook.
- 2. Financial Health: Is TOWN’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.