Yahoo Finance Does Monadelphous Group Limited’s (ASX:MND) Recent Track Record Look Strong?
When Monadelphous Group Limited (ASX:MND) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Monadelphous Group performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see MND has performed. See our latest analysis for Monadelphous Group
Did MND’s recent earnings growth beat the long-term trend and the industry?
I prefer to 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 enables me to assess many different companies in a uniform manner using the latest information. For Monadelphous Group, its most recent bottom-line (trailing twelve month) is AU$66.60M, which, in comparison to the previous year’s level, has increased by 14.95%. Since these figures may be fairly short-term thinking, I have calculated an annualized five-year figure for MND’s earnings, which stands at AU$109.85M This shows that, although earnings growth from last year was positive, over the long run, Monadelphous Group’s earnings have been diminishing on average.
Why is this? Well, let’s look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well. Although revenue growth in the last few years, has been negative, earnings growth has been deteriorating by even more, meaning Monadelphous Group has been ramping up its expenses. This harms margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the Australian construction industry has been growing its average earnings by double-digit 18.04% in the previous twelve months, . This is a turnaround from a volatile drop of -6.02% in the past few years. This means in the recent industry expansion, Monadelphous Group has not been able to realize the gains unlike its average peer.
What does this mean?
Though Monadelphous Group’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are influencing the industry as a whole, hence the high industry growth rate over the same time frame. I recommend you continue to research Monadelphous Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MND’s future growth? Take a look at our free research report of analyst consensus for MND’s outlook.
Financial Health: Is MND’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.
