Examining AMA Group Limited’s (ASX:AMA) 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 AMA’s latest performance announced on 30 June 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for AMA Group

How Did AMA’s Recent Performance Stack Up Against Its Past?

I use data from the most recent 12 months, 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 analyze different stocks on a more comparable basis, using new information. For AMA Group, its latest trailing-twelve-month earnings is AU$17.21M, which compared to the prior year’s figure, has climbed up by more than double. Since these values are somewhat short-term thinking, I have computed an annualized five-year value for AMA Group’s net income, which stands at AU$8.78M This shows that, generally, AMA Group has been able to gradually grow its net income over the last couple of years as well.

How has it been able to do this? Let’s see if it is only attributable to industry tailwinds, or if AMA Group has experienced some company-specific growth. The hike in earnings seems to be driven by a robust top-line increase outpacing its growth rate of expenses. Though this resulted in a margin contraction, it has made AMA Group more profitable. Inspecting growth from a sector-level, the Australian specialty retail industry has been growing its average earnings by double-digit 10.45% in the prior twelve months, and a more muted 7.51% over the past five. This means any tailwind the industry is gaining from, AMA Group is capable of amplifying this to its advantage.

What does this mean?

Though AMA Group’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research AMA Group to get a better picture of the stock by looking at:

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

• 2. Financial Health: Is AMA’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.