In this commentary, I will examine United Bankshares Inc’s (NASDAQ:UBSI) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the banks industry performed. As an investor, I find it beneficial to assess UBSI’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for United Bankshares
Did UBSI’s recent EPS Growth beat the long-term trend and the industry?
I prefer 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 technique enables me to examine many different companies on a more comparable basis, using the latest information. United Bankshares’s latest earnings is $171.4M, which, against the prior year’s figure, has risen by 21.40%. Given that these figures are relatively nearsighted, I’ve computed an annualized five-year figure for United Bankshares’s earnings, which stands at $109.4M. This means that, generally, United Bankshares has been able to gradually grow its profits over the past couple of years as well.
What’s enabled this growth? Let’s take a look at if it is solely owing to an industry uplift, or if United Bankshares has experienced some company-specific growth. In the past few years, United Bankshares expanded its bottom line faster than revenue by successfully 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 its average earnings by double-digit 10.03% in the previous year, and a less exciting 8.99% over the previous few years. This shows that whatever uplift the industry is benefiting from, United Bankshares is able to amplify this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While United Bankshares 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 United Bankshares to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for UBSI’s future growth? Take a look at our free research report of analyst consensus for UBSI’s outlook.
2. Financial Health: Is UBSI’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.