After reading Century Bancorp Inc’s (NASDAQ:CNBK.A) most recent earnings announcement (31 March 2018), 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 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 Century Bancorp’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Century Bancorp
Commentary On CNBK.A’s Past Performance
I 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 blend enables me to assess different stocks in a uniform manner using the latest information. For Century Bancorp, its latest trailing-twelve-month earnings is US$23.91M, which compared to last year’s figure, has declined by -5.56%. Given that these figures may be somewhat short-term, I’ve calculated an annualized five-year value for Century Bancorp’s net income, which stands at US$21.32M This shows that although earnings growth was negative from last year, over the longer term, Century Bancorp’s profits have been growing on average.
What’s the driver of this growth? Let’s take a look at if it is solely because of industry tailwinds, or if Century Bancorp has seen some company-specific growth. Over the past few years, Century Bancorp expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Scanning growth from a sector-level, the US banks industry has been growing, albeit, at a unexciting single-digit rate of 3.32% in the prior year, and 8.03% over the previous five years. This shows that whatever recent headwind the industry is facing, it’s hitting Century Bancorp harder than its peers.
What does this mean?
Century Bancorp’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Century Bancorp to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is CNBK.A’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 CNBK.A 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 CNBK.A 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 31 March 2018. 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.