Investors with a long-term horizong may find it valuable to assess MPL Verbum SA.’s (WSE:VER) 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 MPL Verbum is currently performing. See our latest analysis for MPL Verbum
Was VER’s recent earnings decline indicative of a tough track record?
To account for any quarterly or half-yearly updates, 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 enables me to analyze different stocks in a uniform manner using new information. For MPL Verbum, its most recent trailing-twelve-month earnings is ZŁ295.16K, which, against the previous year’s level, has fallen by -8.50%. Given that these figures are somewhat nearsighted, I’ve estimated an annualized five-year value for VER’s earnings, which stands at ZŁ269.18K This shows that though earnings declined from last year, over the past couple of years, MPL Verbum’s profits have been increasing on average.
What’s the driver of this growth? Let’s see if it is merely because of an industry uplift, or if MPL Verbum has seen some company-specific growth. In the past few years, MPL Verbum top-line expansion has overtaken earnings and the growth rate of expenses. Though this resulted in a margin contraction, it has softened MPL Verbum’s earnings contraction. Inspecting growth from a sector-level, the PL media industry has been enduring some headwinds over the prior twelve months, leading to an average earnings drop of -7.16%. This is a significant change, given that the industry has been delivering a positive rate of 4.05%, on average, over the past half a decade. This shows that whatever near-term headwind the industry is enduring, it’s hitting MPL Verbum harder than its peers.
What does this mean?
Though MPL Verbum’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research MPL Verbum to get a more holistic view of the stock by looking at:
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1. Financial Health: Is VER’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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2. Valuation: What is VER 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 VER is currently mispriced by the market.
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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 October 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.