Yahoo Finance Metcash Limited (ASX:MTS): Has Recent Earnings Growth Beaten Long-Term Trend?
Examining Metcash Limited’s (ASX:MTS) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess MTS’s latest performance announced on 31 October 2017 and compare these figures to its longer term trend and industry movements. Check out our latest analysis for Metcash
Could MTS beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 allows me to analyze different companies on a similar basis, using the most relevant data points. For Metcash, its most recent bottom-line (trailing twelve month) is AU$189.90M, which, relative to last year’s level, has risen by 14.19%. Given that these figures may be relatively short-term, I’ve computed an annualized five-year figure for Metcash’s net income, which stands at AU$102.77M This suggests that, generally, Metcash has been able to increasingly improve its net income over the past couple of years as well.
What’s the driver of this growth? Let’s see if it is only because of industry tailwinds, or if Metcash has experienced some company-specific growth. Over the last couple of years, Metcash top-line expansion has overtaken earnings and the growth rate of expenses. Though this brought about a margin contraction, it has cushioned Metcash’s earnings contraction. Scanning growth from a sector-level, the Australian consumer retailing industry has been growing its average earnings by double-digit 14.19% in the previous twelve months, and a more subdued 5.44% over the past five years.
What does this mean?
Metcash’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Metcash gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Metcash to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MTS’s future growth? Take a look at our free research report of analyst consensus for MTS’s outlook.
Financial Health: Is MTS’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 October 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.
