For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Barratt Developments plc’s (LSE:BDEV) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. See our latest analysis for Barratt Developments
Did BDEV beat its long-term earnings growth trend and its industry?
For the most up-to-date info, I 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 blend enables me to analyze various companies on a similar basis, using new information. For Barratt Developments, its latest trailing-twelve-month earnings is UK£629.40M, which, relative to the previous year’s level, has climbed up by 10.15%. Since these figures may be relatively nearsighted, I have created an annualized five-year value for BDEV’s net income, which stands at UK£313.10M This means on average, Barratt Developments has been able to consistently improve its earnings over the past couple of years as well.
What’s the driver of this growth? Let’s take a look at whether it is solely a result of an industry uplift, or if Barratt Developments has seen some company-specific growth. Over the past few years, Barratt Developments increased its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the UK consumer durables industry has been growing its average earnings by double-digit 17.09% over the prior year, and 24.04% over the past five years. This suggests that whatever tailwind the industry is profiting from, Barratt Developments has not been able to leverage it as much as its average peer.
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? You should continue to research Barratt Developments to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for BDEV’s future growth? Take a look at our free research report of analyst consensus for BDEV’s outlook.
-
Financial Health: Is BDEV’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.
-
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.