Assessing iSelect Limited’s (ASX:ISU) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess ISU’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for iSelect
Despite a decline, did ISU underperform the long-term trend and the industry?
I like to use data from the most recent 12 months, 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 method enables me to analyze many different companies in a uniform manner using the latest information. For iSelect, its most recent bottom-line (trailing twelve month) is AU$14.38M, which, in comparison to last year’s level, has dropped by -26.79%. Since these figures are relatively short-term thinking, I’ve determined an annualized five-year figure for iSelect’s earnings, which stands at AU$11.65M This means despite the fact that earnings declined from the prior year, over the past couple of years, iSelect’s earnings have been increasing on average.
How has it been able to do this? Let’s take a look at if it is merely owing to an industry uplift, or if iSelect has seen some company-specific growth. The ascend in earnings seems to be driven by a strong top-line increase overtaking its growth rate of costs. Though this has caused a margin contraction, it has made iSelect more profitable. Looking at growth from a sector-level, the Australian consumer services industry has been enduring some headwinds over the prior twelve months, leading to an average earnings drop of -8.99%. This is a major change, given that the industry has constantly been delivering a a notable growth of 15.66% in the last five years. This means whatever recent headwind the industry is experiencing, it’s hitting iSelect 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 unpredictable earnings, can have many factors influencing its business. I suggest you continue to research iSelect to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for ISU’s future growth? Take a look at our free research report of analyst consensus for ISU’s outlook.
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2. Financial Health: Is ISU’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.
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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.
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.