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Did Legend Corporation Limited’s (ASX:LGD) Recent Earnings Growth Beat The Trend?

Today I will examine Legend Corporation Limited’s (ASX:LGD) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of LGD’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for Legend

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

LGD’s trailing twelve-month earnings (from 31 December 2017) of AU$5.52m has jumped 84.46% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -11.74%, indicating the rate at which LGD is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is solely due to an industry uplift, or if Legend has experienced some company-specific growth.

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Over the past few years, Legend top-line expansion has outstripped earnings and the growth rate of expenses. Though this has led to a margin contraction, it has lessened Legend’s earnings contraction. Scanning growth from a sector-level, the Australian trade distributors industry has been

ASX:LGD Income Statement June 25th 18
ASX:LGD Income Statement June 25th 18

In terms of returns from investment, Legend has not invested its equity funds well, leading to a 7.77% return on equity (ROE), below the sensible minimum of 20%.

What does this mean?

Though Legend’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook. I recommend you continue to research Legend to get a better picture of the stock by looking at:

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

  2. Financial Health: Is LGD’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.