Understanding how Tiptree Inc (NASDAQ:TIPT) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Tiptree is doing by comparing its latest earnings with its long-term trend as well as the performance of its diversified financial industry peers. See our latest analysis for Tiptree
Was TIPT weak performance lately part of a long-term decline?
I use the ‘latest twelve-month’ data, 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 different companies on a more comparable basis, using new information. For Tiptree, its latest trailing-twelve-month earnings is US$1.19M, which, against last year’s level, has sunken by a substantial -91.78%. Given that these values are somewhat myopic, I have calculated an annualized five-year value for TIPT’s earnings, which stands at -US$199.26K This suggests that even though earnings declined against the previous year, in the long run, Tiptree’s profits have been growing on average.
What’s enabled this growth? Well, let’s take a look at if it is solely owing to an industry uplift, or if Tiptree has experienced some company-specific growth. The climb in earnings seems to be supported by a substantial top-line increase beating its growth rate of expenses. Though this has led to a margin contraction, it has made Tiptree more profitable. Viewing growth from a sector-level, the US diversified financial industry has been growing its average earnings by double-digit 23.27% over the previous year, and 12.84% over the last five years. This means any uplift the industry is profiting from, Tiptree has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Tiptree to get a better picture of the stock by looking at:
- 1. Financial Health: Is TIPT’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. 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.