Assessing Multi-Color Corporation’s (NASDAQ:LABL) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess LABL’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. See our latest analysis for Multi-Color
Were LABL’s earnings stronger than its past performances and the industry?
I look at 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 blend allows me to analyze various companies on a more comparable basis, using the most relevant data points. For Multi-Color, its most recent trailing-twelve-month earnings is US$66.55M, which, relative to the previous year’s level, has risen by 26.62%. Given that these values are somewhat myopic, I have calculated an annualized five-year figure for Multi-Color’s net income, which stands at US$38.22M This suggests that, on average, Multi-Color has been able to consistently raise its bottom line over the past few years as well.
What’s enabled this growth? Let’s see whether it is merely attributable to an industry uplift, or if Multi-Color has seen some company-specific growth. In the last couple of years, Multi-Color increased its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the US commercial services industry has been growing, albeit, at a unexciting single-digit rate of 6.67% over the prior twelve months, and 8.88% over the past five years. This suggests that whatever uplift the industry is profiting from, Multi-Color is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Multi-Color to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for LABL’s future growth? Take a look at our free research report of analyst consensus for LABL’s outlook.
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2. Financial Health: Is LABL’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.