Examining Adelaide Brighton Limited’s (ASX:ABC) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess ABC’s latest performance announced on 30 June 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for Adelaide Brighton

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

For the most up-to-date info, 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 allows me to examine different companies on a more comparable basis, using the most relevant data points. For Adelaide Brighton, its most recent earnings (trailing twelve month) is A$177.9M, which, against last year’s level, has declined by -12.11%. Since these figures are relatively short-term thinking, I have computed an annualized five-year value for Adelaide Brighton’s earnings, which stands at A$168.0M. This means that while earnings declined from the prior year, in the long run, Adelaide Brighton’s profits have been increasing on average.

What’s the driver of this growth? Well, let’s take a look at whether it is merely because of an industry uplift, or if Adelaide Brighton has experienced some company-specific growth. In the past couple of years, Adelaide Brighton expanded its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian basic materials industry has been enduring some headwinds over the prior year, leading to an average earnings drop of -5.13%. This is a momentous change, given that the industry has been delivering a positive rate of 7.49%, on average, over the past half a decade. This shows that whatever near-term headwind the industry is enduring, it’s hitting Adelaide Brighton harder than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research Adelaide Brighton to get a better picture of the stock by looking at:

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

• 2. Financial Health: Is ABC’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 June 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.