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 RCG Corporation Limited’s (ASX:RCG) 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 RCG
Was RCG weak performance lately part of a long-term decline?
For the most up-to-date info, I use data from the most recent 12 months, 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 method allows me to examine different stocks on a similar basis, using new information. For RCG, the most recent twelve-month earnings is A$29M, which, relative to the prior year’s level, has declined by -3.11%. Since these figures are fairly myopic, I’ve computed an annualized five-year figure for RCG’s net income, which stands at A$16M. This shows that even though earnings declined from the previous year, over time, RCG’s profits have been growing on average.
What’s enabled this growth? Well, let’s take a look at whether it is merely owing to an industry uplift, or if RCG has experienced some company-specific growth. The climb in earnings seems to be supported by a solid top-line increase overtaking its growth rate of costs. Though this resulted in a margin contraction, it has made RCG more profitable. Scanning growth from a sector-level, the Australian specialty retail industry has been growing its average earnings by double-digit 12.63% in the past year, and a less exciting 3.55% over the past couple of years. This means any tailwind the industry is benefiting from, RCG has not been able to reap as much as its average peer.
What does this mean?
Though RCG’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research RCG to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for RCG’s future growth? Take a look at our free research report of analyst consensus for RCG’s outlook.
2. Financial Health: Is RCG’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.