Where Western New England Bancorp Inc’s (NASDAQ:WNEB) Earnings Growth Stands Against Its Industry
Examining Western New England Bancorp Inc’s (NASDAQ:WNEB) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess WNEB’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
See our latest analysis for Western New England Bancorp
How Did WNEB’s Recent Performance Stack Up Against Its Past?
WNEB’s trailing twelve-month earnings (from 30 June 2018) of US$12.1m has increased by 6.9% compared to the previous year. However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.9%, indicating the rate at which WNEB is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is facing the same headwind.
Revenue growth in the last few years, has been positive, however, earnings growth has not been able to catch up, meaning Western New England Bancorp has been ramping up its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the US mortgage industry has been growing, albeit, at a subdued single-digit rate of 9.4% over the previous year, and a substantial 13.6% over the past five years. This growth is a median of profitable companies of 25 Mortgage companies in US including BV Financial, FSB Bancorp and Bancorp 34. This suggests that whatever uplift the industry is deriving benefit from, Western New England Bancorp has not been able to realize the gains unlike its average peer.
In terms of returns from investment, Western New England Bancorp has fallen short of achieving a 20% return on equity (ROE), recording 5.0% instead. Furthermore, its return on assets (ROA) of 0.6% is below the US Mortgage industry of 0.7%, indicating Western New England Bancorp’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Western New England Bancorp’s debt level, has increased over the past 3 years from 3.0% to 5.2%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 212% to 116% over the past 5 years.
What does this mean?
Western New England Bancorp’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Western New England Bancorp gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Western New England Bancorp to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for WNEB’s future growth? Take a look at our free research report of analyst consensus for WNEB’s outlook.
Financial Health: Are WNEB’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.
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 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
