Assessing Spectrum Brands Holdings Inc’s (NYSE:SPB) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Spectrum Brands Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its household products industry peers. See our latest analysis for Spectrum Brands Holdings

How Did SPB’s Recent Performance Stack Up Against Its Past?

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to analyze many different companies in a uniform manner using the most relevant data points. For Spectrum Brands Holdings, its latest earnings (trailing twelve month) is US$402.20M, which, against the prior year’s figure, has risen by 35.44%. Given that these figures may be fairly myopic, I’ve estimated an annualized five-year value for SPB’s earnings, which stands at US$120.33M This suggests that, on average, Spectrum Brands Holdings has been able to consistently improve its net income over the last few years as well.

What’s the driver of this growth? Let’s take a look at if it is solely a result of industry tailwinds, or if Spectrum Brands Holdings has seen some company-specific growth. In the past couple of years, Spectrum Brands Holdings expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the US household products industry has been growing its average earnings by double-digit 22.57% in the past twelve months, and a less exciting 8.63% over the past five years. This means whatever uplift the industry is deriving benefit from, Spectrum Brands Holdings is able to amplify this to its advantage.

What does this mean?

Though Spectrum Brands Holdings’s past data is helpful, it is only one aspect of my investment thesis. While Spectrum Brands Holdings 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 Spectrum Brands Holdings to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for SPB’s future growth? Take a look at our free research report of analyst consensus for SPB’s outlook.

• 2. Financial Health: Is SPB’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 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.