After looking at Sydney Airport Limited’s (ASX:SYD) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Sydney Airport’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Sydney Airport
How Did SYD’s Recent Performance Stack Up Against Its Past?
To account for any quarterly or half-yearly updates, I 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 blend allows me to analyze many different companies on a more comparable basis, using the latest information. For Sydney Airport, its latest earnings (trailing twelve month) is A$327.9M, which, against the prior year’s level, has increased by a somewhat subdued 6.32%. Given that these figures are somewhat myopic, I’ve determined an annualized five-year value for SYD’s earnings, which stands at A$174.4M. This means generally, Sydney Airport has been able to increasingly grow its earnings over the last few years as well.
What’s the driver of this growth? Let’s take a look at if it is merely attributable to an industry uplift, or if Sydney Airport has experienced some company-specific growth. In the past few years, Sydney Airport expanded its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the Australian transportation infrastructure industry has been growing its average earnings by double-digit 26.80% over the past twelve months, and a more muted 6.47% over the past five years. This means any tailwind the industry is deriving benefit from, Sydney Airport has not been able to leverage it as much as its industry peers.
What does this mean?
Sydney Airport’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Sydney Airport gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Sydney Airport to get a more holistic view of the stock by looking at: