AllianceBernstein Holding LP. (NYSE:AB): Does The -4.23% Earnings Drop Reflect A Longer Term Trend?

Simply Wall St April 27, 2018

Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at AllianceBernstein Holding LP.’s (NYSE:AB) 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. Check out our latest analysis for AllianceBernstein Holding

Was AB’s weak performance lately a part of a long-term decline?

I use the ‘latest twelve-month’ data, 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 different stocks on a more comparable basis, using the latest information. For AllianceBernstein Holding, its latest earnings (trailing twelve month) is US$207.42M, which, in comparison to last year’s level, has declined by -4.23%. Given that these values are somewhat nearsighted, I have determined an annualized five-year figure for AllianceBernstein Holding’s earnings, which stands at US$123.84M This means that even though earnings growth was negative from last year, over time, AllianceBernstein Holding’s profits have been rising on average.

NYSE:AB Income Statement Apr 26th 18
NYSE:AB Income Statement Apr 26th 18
What’s the driver of this growth? Let’s take a look at whether it is only owing to industry tailwinds, or if AllianceBernstein Holding has seen some company-specific growth. In the last couple of years, AllianceBernstein Holding increased its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 15.96% over the past year, and 10.87% over the past five years. This means that any uplift the industry is profiting from, AllianceBernstein Holding has not been able to reap as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research AllianceBernstein Holding to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for AB’s future growth? Take a look at our free research report of analyst consensus for AB’s outlook.
  2. Financial Health: Is AB’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 31 December 2017. This may not be consistent with full year annual report figures.