Examining Severn Bancorp Inc’s (NASDAQ:SVBI) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess SVBI’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements. Check out our latest analysis for Severn Bancorp

How Well Did SVBI Perform?

I look at 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 allows me to examine various companies on a more comparable basis, using new information. For Severn Bancorp, its most recent bottom-line (trailing twelve month) is US$2.54M, which, in comparison to the previous year’s level, has plunged by a non-trivial -81.65%. Given that these values are relatively short-term thinking, I’ve estimated an annualized five-year figure for Severn Bancorp’s net income, which stands at -US$838.79K This suggests that even though earnings declined from last year, over the long run, Severn Bancorp’s earnings have been growing on average.

What’s the driver of this growth? Well, let’s take a look at whether it is solely attributable to an industry uplift, or if Severn Bancorp has experienced some company-specific growth. In the past few years, Severn Bancorp expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US mortgage industry has been relatively flat in terms of earnings growth over the prior year, levelling off from a notable 12.93% over the past five. This shows that any recent headwind the industry is enduring, it’s hitting Severn Bancorp harder than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I suggest you continue to research Severn Bancorp to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

• 1. Financial Health: Is SVBI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.

• 2. Valuation: What is SVBI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in this free research report helps visualize whether SVBI is currently mispriced by the market.

• 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 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.