Today I will examine Washington H Soul Pattinson and Company Limited’s (ASX:SOL) latest earnings update (31 January 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of SOL’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View our latest analysis for Washington H. Soul Pattinson

Could SOL beat the long-term trend and outperform its industry?

For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to examine different stocks on a similar basis, using the latest information. For Washington H. Soul Pattinson, its most recent bottom-line (trailing twelve month) is AU$330.83M, which, relative to the previous year’s figure, has risen by an impressive 62.98%. Given that these values are relatively myopic, I’ve estimated an annualized five-year value for SOL’s earnings, which stands at AU$178.16M This means that, generally, Washington H. Soul Pattinson has been able to steadily improve its bottom line over the last few years as well.

How has it been able to do this? Let’s see if it is merely owing to an industry uplift, or if Washington H. Soul Pattinson has seen some company-specific growth. Over the past couple of years, Washington H. Soul Pattinson grew bottom-line, while its top-line fell, by successfully controlling its costs. This brought about to a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian oil and gas industry has been increasing growth, more than doubling average earnings over the previous year, and a double-digit 12.72% over the past half a decade. This means any tailwind the industry is deriving benefit from, Washington H. Soul Pattinson has not been able to realize the gains unlike its average peer.

What does this mean?

Washington H. Soul Pattinson’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 Washington H. Soul Pattinson gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Washington H. Soul Pattinson to get a more holistic view of the stock by looking at: