Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Synthomer plc’s (LSE:SYNT) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Synthomer
Were SYNT’s earnings stronger than its past performances and the industry?
I like to 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 method enables me to examine different companies in a uniform manner using the most relevant data points. For Synthomer, its most recent bottom-line (trailing twelve month) is UK£105.20M, which, in comparison to last year’s figure, has jumped up by 33.67%. Since these values may be relatively short-term thinking, I have estimated an annualized five-year figure for SYNT’s net income, which stands at UK£58.17M This shows that, on average, Synthomer has been able to steadily improve its bottom line over the last couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is merely because of an industry uplift, or if Synthomer has seen some company-specific growth. In the last few years, Synthomer grew its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Scanning growth from a sector-level, the UK chemicals industry has been growing its average earnings by double-digit 28.53% over the prior year, and a less exciting 3.95% over the past half a decade. This shows that any uplift the industry is benefiting from, Synthomer is able to amplify this to its advantage.
What does this mean?
Though Synthomer’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? You should continue to research Synthomer to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for SYNT’s future growth? Take a look at our free research report of analyst consensus for SYNT’s outlook.
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2. Financial Health: Is SYNT’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 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.