Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Empired Limited’s (ASX:EPD) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Empired
How Did EPD’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 method allows me to analyze many different companies on a more comparable basis, using the latest information. For Empired, its most recent earnings (trailing twelve month) is AU$3.54M, which, relative to the previous year’s figure, has moved up by 12.70%. Given that these figures may be relatively short-term, I’ve calculated an annualized five-year value for EPD’s earnings, which stands at AU$1.96M This shows that, on average, Empired has been able to steadily raise its earnings over the last few years as well.
What’s the driver of this growth? Let’s see if it is merely attributable to an industry uplift, or if Empired has seen some company-specific growth. The hike in earnings seems to be driven by a substantial top-line increase outpacing its growth rate of costs. Though this has caused a margin contraction, it has made Empired more profitable. Eyeballing growth from a sector-level, the Australian it industry has been growing its average earnings by double-digit 16.41% in the prior twelve months, and 17.39% over the last five years. This means that whatever uplift the industry is profiting from, Empired has not been able to leverage it as much as its industry peers.
What does this mean?
Though Empired’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Empired gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Empired 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 EPD’s future growth? Take a look at our free research report of analyst consensus for EPD’s outlook.
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2. Financial Health: Is EPD’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 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.