After looking at Installux SA’s (ENXTPA:STAL) latest earnings update (30 June 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for Installux
Did STAL beat its long-term earnings growth trend and its industry?
I like 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 technique allows me to assess different companies on a similar basis, using the latest information. For Installux, its latest trailing-twelve-month earnings is €9.60M, which, in comparison to the previous year’s level, has increased by a fairly soft 7.53%. Given that these values are relatively short-term thinking, I’ve computed an annualized five-year figure for Installux’s net income, which stands at €7.63M This means on average, Installux has been able to increasingly raise its bottom line over the past couple of years as well.How has it been able to do this? Let’s take a look at if it is merely because of an industry uplift, or if Installux has experienced some company-specific growth. Over the past few years, Installux grew its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the FR building industry has been relatively flat in terms of earnings growth over the previous couple of years. This shows that whatever near-term headwind the industry is facing, the impact on Installux has been softer relative to its peers.
What does this mean?
Installux’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Installux 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 Installux to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for STAL’s future growth? Take a look at our free research report of analyst consensus for STAL’s outlook.
- 2. Financial Health: Is STAL’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.
- 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.