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When Public Joint Stock Company Kurgan Generation Company (MISX:KGKC) released its most recent earnings update (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Kurgan Generation’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not KGKC actually performed well. Below is a quick commentary on how I see KGKC has performed. See our latest analysis for Kurgan Generation
Did KGKC’s recent earnings growth beat the long-term trend and the industry?
I prefer 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 allows me to examine different companies on a similar basis, using the latest information. For Kurgan Generation, its most recent bottom-line (trailing twelve month) is RUРУБ465.65M, which, against the previous year’s level, has increased by a substantial 52.04%. Since these figures may be relatively myopic, I have determined an annualized five-year figure for KGKC’s earnings, which stands at RUРУБ15.22M This shows that, on average, Kurgan Generation has been able to steadily improve its bottom line over the past couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is solely owing to industry tailwinds, or if Kurgan Generation has seen some company-specific growth. Over the past couple of years, Kurgan Generation grew its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Looking at growth from a sector-level, the RU water utilities industry has been growing, albeit, at a muted single-digit rate of 8.82% over the prior twelve months, and 7.29% over the past five. This means that any uplift the industry is enjoying, Kurgan Generation is capable of leveraging this to its advantage.
What does this mean?
Though Kurgan Generation’s past data is helpful, it is only one aspect of my investment thesis. While Kurgan Generation has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Kurgan Generation to get a more holistic view of the stock by looking at:
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Financial Health: Is KGKC’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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Valuation: What is KGKC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether KGKC is currently mispriced by the market.
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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.