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Does Entegra Financial Corp’s (NASDAQ:ENFC) -16% Earnings Drop Reflect A Longer Term Trend?

After looking at Entegra Financial Corp’s ( NASDAQ:ENFC ) latest earnings announcement (30 September 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

See our latest analysis for Entegra Financial

Despite a decline, did ENFC underperform the long-term trend and the industry?

ENFC’s trailing twelve-month earnings (from 30 September 2018) of US$7m has declined by -16% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 1.6%, indicating the rate at which ENFC is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the entire industry is experiencing the hit as well.

NasdaqGM:ENFC Income Statement Export October 23rd 18

In terms of returns from investment, Entegra Financial has fallen short of achieving a 20% return on equity (ROE), recording 4.4% instead. Furthermore, its return on assets (ROA) of 0.4% is below the US Mortgage industry of 0.7%, indicating Entegra Financial’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Entegra Financial’s debt level, has increased over the past 3 years from 3.5% to 4.1%.

What does this mean?

Entegra Financial’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 capricious earnings, can have many factors impacting its business. I recommend you continue to research Entegra Financial to get a more holistic view of the stock by looking at:

  1. Future Outlook : What are well-informed industry analysts predicting for ENFC’s future growth? Take a look at our free research report of analyst consensus for ENFC’s outlook.
  2. Financial Health : Are ENFC’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 .
  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 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 .