In This Article:
Examining Supply Network Limited’s (ASX:SNL) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess SNL’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Supply Network
How Did SNL’s Recent Performance Stack Up Against Its Past?
I 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 blend enables me to analyze different stocks on a similar basis, using the latest information. For Supply Network, its most recent trailing-twelve-month earnings is AU$7.59M, which, relative to last year’s level, has moved up by 38.58%. Given that these figures may be fairly short-term thinking, I have determined an annualized five-year value for SNL’s earnings, which stands at AU$5.00M This shows that, on average, Supply Network has been able to consistently grow its bottom line over the last couple of years as well.
What’s the driver of this growth? Let’s see whether it is merely attributable to an industry uplift, or if Supply Network has experienced some company-specific growth. In the last few years, Supply Network expanded its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the Australian retail distributors industry has been growing its average earnings by double-digit 38.63% in the previous year, . This is a change from a volatile drop of -2.21% in the past few years. This shows that, in the recent industry expansion, Supply Network has not been able to leverage it as much as its industry peers.
What does this mean?
Supply Network’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Supply Network to get a better picture of the stock by looking at:
-
1. Financial Health: Is SNL’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.
-
2. Valuation: What is SNL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SNL is currently mispriced by the market.
-
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.