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Investors with a long-term horizong may find it valuable to assess Evolve Education Group Limited’s (NZSE:EVO) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Evolve Education Group is currently performing. View our latest analysis for Evolve Education Group
Was EVO weak performance lately part of a long-term decline?
For the most up-to-date info, I use the ‘latest twelve-month’ data, 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 allows me to analyze various companies on a similar basis, using new information. For Evolve Education Group, its latest earnings (trailing twelve month) is NZ$11.04M, which, against last year’s figure, has declined by a significant -31.17%. Given that these figures may be fairly short-term thinking, I’ve calculated an annualized five-year value for Evolve Education Group’s net income, which stands at NZ$10.83M This shows that although earnings declined from the prior year, over a longer period of time, Evolve Education Group’s earnings have been rising on average.
What’s enabled this growth? Well, let’s take a look at if it is only owing to an industry uplift, or if Evolve Education Group has seen some company-specific growth. Over the past couple of years, Evolve Education Group grew its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the NZ consumer services industry has been growing its average earnings by double-digit 17.49% over the previous twelve months, and a more muted 8.16% over the previous five years. This means that whatever tailwind the industry is benefiting from, Evolve Education Group has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research Evolve Education 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 EVO’s future growth? Take a look at our free research report of analyst consensus for EVO’s outlook.
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2. Financial Health: Is EVO’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 September 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.