Does London Stock Exchange Group plc's (LON:LSE) 137.67% Earnings Growth Make It An Outperformer?

Investors with a long-term horizong may find it valuable to assess London Stock Exchange Group plc's (LSE:LSE) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how London Stock Exchange Group is currently performing. Check out our latest analysis for London Stock Exchange Group

How Well Did LSE Perform?

I like to use the ‘latest twelve-month’ data, 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 allows me to assess different companies on a similar basis, using the latest information. For London Stock Exchange Group, its most recent earnings (trailing twelve month) is UK£530.00M, which, in comparison to the prior year's level, has soared up by over 100%. Given that these figures may be fairly short-term thinking, I have created an annualized five-year value for London Stock Exchange Group's net income, which stands at UK£277.83M This suggests that, generally, London Stock Exchange Group has been able to increasingly grow its profits over the past few years as well.

What's the driver of this growth? Let's take a look at whether it is only owing to industry tailwinds, or if London Stock Exchange Group has seen some company-specific growth. Over the past few years, London Stock Exchange Group top-line expansion has outpaced earnings and the growth rate of expenses. Though this has caused a margin contraction, it has softened London Stock Exchange Group's earnings contraction. Eyeballing growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 24.33% over the past twelve months, and 17.78% over the past five years. This suggests that any tailwind the industry is deriving benefit from, London Stock Exchange Group is capable of leveraging this to its advantage.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as London Stock Exchange Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research London Stock Exchange Group to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for LSE’s future growth? Take a look at our free research report of analyst consensus for LSE’s outlook.
• 2. Financial Health: Is LSE’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.

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.

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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.