Does Origo Partners PLC's (LON:OPP) Earnings Growth Make It An Outperformer?

When Origo Partners PLC (AIM:OPP) announced its most recent earnings (30 June 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Origo Partners performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see OPP has performed. See our latest analysis for Origo Partners

Could OPP beat the long-term trend and outperform its industry?

I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to examine different stocks in a uniform manner using the latest information. For Origo Partners, its most recent trailing-twelve-month earnings is -US$22.65M, which, relative to last year’s figure, has become less negative. Given that these figures may be relatively short-term thinking, I’ve calculated an annualized five-year figure for OPP's earnings, which stands at -US$34.61M. This means that, though net income is negative, it has become less negative over the years.

We can further analyze Origo Partners's loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Origo Partners has seen an annual decline in revenue of -2.14%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 24.33% over the previous year, and 17.78% over the past half a decade. This means that any tailwind the industry is profiting from, Origo Partners has not been able to reap as much as its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Origo Partners may be facing and whether management guidance has dependably been met in the past. You should continue to research Origo Partners to get a more holistic view of the stock by looking at:

• 1. Financial Health: Is OPP’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. 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 30 June 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.