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After reading Fiducian Group Limited’s (ASX:FID) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Fiducian Group
Could FID beat the long-term trend and outperform its industry?
I like to use the ‘latest twelve-month’ data, 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 technique enables me to analyze different companies on a more comparable basis, using the latest information. For Fiducian Group, its most recent bottom-line (trailing twelve month) is AU$8.41M, which, relative to the previous year’s figure, has jumped up by 28.05%. Since these values may be somewhat nearsighted, I have computed an annualized five-year figure for Fiducian Group’s earnings, which stands at AU$4.65M This means that, generally, Fiducian Group has been able to consistently grow its earnings over the last few years as well.
What’s enabled this growth? Let’s take a look at if it is merely a result of an industry uplift, or if Fiducian Group has experienced some company-specific growth. In the last couple of years, Fiducian Group grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian capital markets industry has been growing, albeit, at a unexciting single-digit rate of 9.43% in the previous year, and a substantial 15.00% over the last five years. This means any uplift the industry is profiting from, Fiducian Group is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Fiducian Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Fiducian Group to get a more holistic view of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for FID’s future growth? Take a look at our free research report of analyst consensus for FID’s outlook.
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2. Financial Health: Is FID’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.