Examining Piaggio & C SpA’s (BIT:PIA) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess PIA’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements. View our latest analysis for Piaggio & C

Did PIA beat its long-term earnings growth trend and its industry?

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 method enables me to examine different companies in a uniform manner using new information. For Piaggio & C, its latest trailing-twelve-month earnings is €19.98M, which, in comparison to the prior year’s level, has moved up by 42.34%. Since these figures are somewhat short-term, I have determined an annualized five-year figure for Piaggio & C’s net income, which stands at €20.95M This suggests that, although earnings growth from last year was positive, over the past couple of years, Piaggio & C’s earnings have been deteriorating on average.

Why could this be happening? Let’s examine what’s going on with margins and whether the rest of the industry is feeling the heat. Although revenue growth in the last couple of years, has been negative, earnings growth has been deteriorating by even more, suggesting that Piaggio & C has been ramping up its expenses. This hurts margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the IT auto industry has been growing its average earnings by double-digit 38.42% over the past twelve months, and a more muted 9.47% over the past five years. This suggests that whatever tailwind the industry is profiting from, Piaggio & C is able to leverage this to its advantage.

What does this mean?

Piaggio & C’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are impacting the entire industry hence the high industry growth rate over the same period of time. I recommend you continue to research Piaggio & C to get a more holistic view of the stock by looking at:

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

• 2. Financial Health: Is PIA’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.