After looking at Singapore Exchange Limited’s (SGX:S68) latest earnings announcement (31 December 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Singapore Exchange

How Did S68’s Recent Performance Stack Up Against Its Past?

For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to assess various companies on a more comparable basis, using the latest information. For Singapore Exchange, its latest trailing-twelve-month earnings is S$347.35M, which, relative to last year’s level, has increased by a fairly subdued 2.95%. Since these figures may be fairly myopic, I’ve calculated an annualized five-year figure for S68’s earnings, which stands at S$327.24M This means generally, Singapore Exchange has been able to increasingly improve its net income over the past few years as well.

What’s the driver of this growth? Well, let’s take a look at if it is merely a result of an industry uplift, or if Singapore Exchange has experienced some company-specific growth. The hike in earnings seems to be propelled by a solid top-line increase overtaking its growth rate of expenses. Though this brought about a margin contraction, it has made Singapore Exchange more profitable. Scanning growth from a sector-level, the SG capital markets industry has been growing, albeit, at a unexciting single-digit rate of 2.96% over the prior twelve months, . This is a change from a volatile drop of -2.77% in the last few years. This suggests that whatever headwind the industry is facing, it’s hitting Singapore Exchange harder than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Singapore Exchange has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Singapore Exchange to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.