RE:RE:What's the explanation?News on April 1 2018
With A -40.70% Earnings Drop, Did VersaBank (TSE:VB) Really Underperform?
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess VersaBank’s (TSX:VB) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for VersaBank
Was VB’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, 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 method enables me to examine different stocks on a more comparable basis, using the latest information. For VersaBank, its most recent trailing-twelve-month earnings is CA$9.38M, which compared to last year’s level, has sunken by a large -40.70%. Given that these figures may be relatively short-term thinking, I have calculated an annualized five-year figure for VersaBank’s net income, which stands at CA$7.24M This suggests that though earnings declined from last year, in the long run, VersaBank’s profits have been growing on average.
TSX:VB Income Statement Apr 1st 18 How has it been able to do this? Let’s see if it is solely a result of industry tailwinds, or if VersaBank has seen some company-specific growth. Over the past couple of years, VersaBank increased 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 Canadian banks industry has been growing, albeit, at a unexciting single-digit rate of 6.67% in the past twelve months, and 8.46% over the past five. This means that any uplift the industry is enjoying, VersaBank has not been able to realize the gains unlike its industry peers. What does this mean?
VersaBank’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 unpredictable earnings, can have many factors affecting its business. You should continue to research VersaBank to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is VB’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 VB 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 VB 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 January 2018. This may not be consistent with full year annual report figures. theSwede99 wrote: Insiders buying last week:
| 10 - Acquisition or disposition in the public market | Common Shares | +300 | 7.1400 | 2,900 |
| | 2018-03-28 | 2018-03-28 | $VB
VersaBank | TAYLOR, DAVID ROY 4 - Director of Issuer, 5 - Senior Officer of Issuer | 10 - Acquisition or disposition in the public market | Common Shares | +10,000 | 7.3000 | 370,000 |
| | 2018-03-26 | 2018-03-28 | $VB
VersaBank | Dixon, Michael Richard 5 - Senior Officer of Issuer | 10 - Acquisition or disposition in the public market |
Markets in a tizzy??