Yahoo Finance Where Challenger Limited (ASX:CGF) Stands In Terms Of Earnings Growth Against Its Industry
Analyzing Challenger Limited’s (ASX:CGF) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess CGF’s recent performance announced on 31 December 2017 and compare these figures to its long-term trend and industry movements. See our latest analysis for Challenger
Commentary On CGF’s Past Performance
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 enables me to examine different stocks in a uniform manner using the latest information. For Challenger, its latest trailing-twelve-month earnings is AU$391.50M, which, in comparison to last year’s figure, has climbed up by 32.76%. Since these figures are somewhat short-term thinking, I’ve estimated an annualized five-year value for CGF’s net income, which stands at AU$318.33M This shows that, on average, Challenger has been able to consistently raise its profits over the past few years as well.
How has it been able to do this? Well, let’s take a look at if it is solely owing to an industry uplift, or if Challenger has seen some company-specific growth. The rise in earnings seems to be propelled by a strong top-line increase outpacing its growth rate of expenses. Though this has caused a margin contraction, it has made Challenger more profitable. Inspecting growth from a sector-level, the Australian diversified financial industry has been growing, albeit, at a muted single-digit rate of 5.37% in the past twelve months, and 9.82% over the past half a decade. This means any uplift the industry is profiting from, Challenger is capable of amplifying this to its advantage.
What does this mean?
Though Challenger’s past data is helpful, it is only one aspect of my investment thesis. While Challenger 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 Challenger to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CGF’s future growth? Take a look at our free research report of analyst consensus for CGF’s outlook.
Financial Health: Is CGF’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.
