After reading Horus AG’s (BST:HRU) most recent earnings announcement (31 December 2016), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Horus’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Horus
Was HRU weak performance lately part of a long-term decline?
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess many different companies on a similar basis, using the most relevant data points. For Horus, its latest earnings (trailing twelve month) is €184.47K, which compared to last year’s figure, has dropped by -21.69%. Given that these values are somewhat myopic, I’ve created an annualized five-year value for Horus’s earnings, which stands at €112.50K This shows that despite the fact that earnings growth was negative against last year, in the long run, Horus’s profits have been increasing on average.What’s the driver of this growth? Well, let’s take a look at whether it is only attributable to an industry uplift, or if Horus has experienced some company-specific growth. The hike in earnings seems to be bolstered by a substantial top-line increase outpacing its growth rate of costs. Though this brought about a margin contraction, it has made Horus more profitable. Looking at growth from a sector-level, the DE capital markets industry has been growing its average earnings by double-digit 14.60% in the prior twelve months, and 13.53% over the previous five years. This shows that whatever tailwind the industry is profiting from, Horus has not been able to realize the gains unlike its average peer.
What does this mean?
Horus’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research Horus to get a more holistic view of the stock by looking at:
- 1. Financial Health: Is HRU’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.
- 2. Valuation: What is HRU worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HRU is currently mispriced by the market.
- 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.