Tiptree, Inc. :TIPT-US: Earnings Analysis: Q1, 2017 By the Numbers : June 12, 2017

Tiptree, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Tiptree, Inc. – Universal Health Realty Income Trust, HCP, Inc., Ventas, Inc., Ashford Hospitality Trust, Inc., Welltower, Inc., Duke Realty Corporation, Sabra Health Care REIT, Inc., CIM Commercial Trust Corporation and Healthcare Trust of America, Inc. Class A (UHT-US, HCP-US, VTR-US, AHT-US, HCN-US, DRE-US, SBRA-US, CMCT-US and HTA-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 166.82 million, Net Earnings of USD 1.08 million.
  • Gross margins narrowed from 40.39% to 36.88% compared to the same period last year, operating (EBITDA) margins now 6.18% from 9.55%.
  • Year-on-year change in operating cash flow of 67.18% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 166.82 255.89 146.51 148.14 139.8
Revenue Growth (%YOY) 19.33 240.38 8.21 24.17 34.92
Earnings (mil) 1.08 7.65 5.85 6.08 5.52
Earnings Growth (%YOY) -80.37 3287.92 228.38 692.4 310.32
Net Margin (%) 0.65 2.99 3.99 4.1 3.95
EPS 0.03 0.21 0.19 0.17 0.16
Return on Equity (%) 1.11 7.93 6.14 6.15 5.47
Return on Assets (%) 0.16 1.05 0.84 0.92 0.86

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Market Share Versus Profits

Revenues History
Earnings History

TIPT-US‘s change in revenue this period compared to the same period last year of 19.33% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TIPT-US is holding onto its market share. Also, for comparison purposes, revenues changed by -34.81% and earnings by -85.83% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 40.39% to 36.88%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 9.55% to 6.18% in this time frame. For comparison, gross margins were 45.95% and EBITDA margins were 19.83% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

TIPT-US‘s change in operating cash flow of 67.18% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 3.56% to 1.50% and (2) one-time items that contributed to a decrease in pretax margins from 3.56% to 1.50%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Tiptree, Inc. operates as a holding company, through its subsidiaries engages in specialty insurance, asset management, senior living, and specialty finance businesses. Its insurance subsidiary, Fortegra Financial Corp., is a provider of credit, warranty, and niche program insurance products. The company’s asset management subsidiary, Tiptree Asset Management Co., specializes in managing credit related assets and CLOs. The senior living operations are conducted through Care Investment Trust, which focuses on the acquisition, ownership and leasing of senior housing properties. The specialty finance activities consists of mortgage origination operations and a controlling interest in a company that provides asset based loans. The company is headquartered in New York, NY. For more information visit www.tiptreeinc.com.

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