Assessing Coastway Bancorp Inc’s (NASDAQ:CWAY) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Coastway Bancorp is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its mortgage industry peers. See our latest analysis for Coastway Bancorp

Was CWAY’s recent earnings decline indicative of a tough track record?

For the purpose of this commentary, I like to use data from the most recent 12 months, 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 method allows me to examine various companies on a similar basis, using the most relevant data points. For Coastway Bancorp, its latest earnings (trailing twelve month) is US$3.08M, which, relative to the prior year’s figure, has fallen by -8.60%. Since these values may be relatively nearsighted, I’ve estimated an annualized five-year value for CWAY’s earnings, which stands at US$1.23M This suggests that even though earnings declined against the previous year, in the long run, Coastway Bancorp’s profits have been growing on average.

What’s the driver of this growth? Let’s see if it is merely a result of industry tailwinds, or if Coastway Bancorp has seen some company-specific growth. Over the last few years, Coastway Bancorp expanded its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the US mortgage industry has been growing its average earnings by double-digit 10.05% in the prior twelve months, and 13.99% over the past five years. This suggests that any uplift the industry is benefiting from, Coastway Bancorp has not been able to leverage it as much as its average peer.

What does this mean?

Coastway Bancorp’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Coastway Bancorp to get a better picture of the stock by looking at:

• 1. Financial Health: Is CWAY’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 CWAY 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 CWAY 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 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.