75.35% EPS growth, which Lovisa Holdings Limited (ASX:LOV) reported for the past 12 months, is more than impressive. Despite this strong performance, the long-term trend in earnings growth and industry’s growth as a whole are key factors for patient investors. Here’s how I test Lovisa Holdings for its performance on that front. See our latest analysis for LOV
Did LOV beat its long-term earnings growth trend and its industry?For a more normalized comparison to its past performance, so that some one-off extraordinary elements don’t impact the assessment, I weigh LOV’s past year EPS growth against a best-fit version of its average annual growth in EPS over the past five years. LOV’s EPS growth over the past year exceeded the long-term average of 22.58%, indicating that it delivered a better earnings growth than projected by its track record. We found that LOV is on a path of improving earnings growth; however, we also want to check whether this recent improvement is better than the broader Specialty Retail industry’s performance. Over the past 12 months of recorded data, not only did LOV’s EPS growth of 75.35% beat long-term average, it also exceeded the Specialty Retail industry average of 14.89%, indicating an acceptable competitive positioning.
By showing strength in both of my tests, Lovisa Holdings displayed a strong recent track record of earnings growth by beating both its long term historical trend and its industry average. But before we conclude the stock is a worthy investment, we should also consider whether this positive growth is already priced into its valuation. In order to develop a full perspective on the stock as an investment, we will need to look at other factors such as its intrinsic value compared to its current price. I recommend you check out our latest free analysis report on Lovisa Holdings to see what are LOV’s growth prospects and whether it could be considered an undervalued opportunity.
PS. If you are not interested in Lovisa Holdings anymore, you can use our free platform to see my list of over 50 stocks with a high growth potential.