For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at First Republic Bank’s (NYSE:FRC) 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. View our latest analysis for First Republic Bank
How FRC fared against its long-term earnings performance and its industry
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to assess various companies on a similar basis, using the latest information. For First Republic Bank, its most recent bottom-line (trailing twelve month) is $681.4M, which, against the previous year’s level, has climbed up by 19.99%. Since these values may be fairly nearsighted, I’ve computed an annualized five-year value for First Republic Bank’s net income, which stands at $440.0M. This means on average, First Republic Bank has been able to consistently improve its net income over the past few years as well.
What’s enabled this growth? Well, let’s take a look at if it is solely because of industry tailwinds, or if First Republic Bank has experienced some company-specific growth. The rise in earnings seems to be bolstered by a substantial top-line increase overtaking its growth rate of expenses. Though this has led to a margin contraction, it has made First Republic Bank more profitable. Looking at growth from a sector-level, the US banks industry has been growing, albeit, at a subdued single-digit rate of 9.87% over the previous twelve months, and 8.52% over the past couple of years. This suggests that any uplift the industry is benefiting from, First Republic Bank is capable of amplifying this to its advantage.
What does this mean?
First Republic Bank’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 First Republic Bank gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research First Republic Bank to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for FRC’s future growth? Take a look at our free research report of analyst consensus for FRC’s outlook.