Examining Experience Co Limited’s (ASX:EXP) 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 EXP’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. Check out our latest analysis for Experience Co

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

For the purpose of this commentary, 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 blend enables me to examine different stocks on a more comparable basis, using the most relevant data points. For Experience Co, its most recent bottom-line (trailing twelve month) is AU$10.50M, which, in comparison to the prior year’s level, has moved up by 28.89%. Since these figures are relatively nearsighted, I’ve determined an annualized five-year value for Experience Co’s net income, which stands at AU$6.25M This suggests that, on average, Experience Co has been able to steadily raise its profits over the last couple of years as well.

What’s the driver of this growth? Let’s see if it is solely owing to an industry uplift, or if Experience Co has seen some company-specific growth. The rise in earnings seems to be propelled by a strong top-line increase outstripping its growth rate of costs. Though this has led to a margin contraction, it has made Experience Co more profitable. Eyeballing growth from a sector-level, the Australian hospitality industry has been growing its average earnings by double-digit 16.33% in the past twelve months, and 18.79% over the past half a decade. This means whatever tailwind the industry is enjoying, Experience Co is capable of amplifying this to its advantage.

What does this mean?

Experience Co’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 Experience Co gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Experience Co to get a better picture of the stock by looking at:

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

2. Financial Health: Is EXP’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 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.