After reading NMC Health Plc’s (LSE:NMC) latest earnings update (31 December 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether NMC has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. Check out our latest analysis for NMC Health
How NMC fared against its long-term earnings performance and its industry
For the most up-to-date info, I 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 blend allows me to examine various companies on a more comparable basis, using new information. For NMC Health, its most recent bottom-line (trailing twelve month) is US$185.97M, which, against last year’s figure, has risen by 40.16%. Given that these figures are somewhat short-term, I have computed an annualized five-year figure for NMC Health’s net income, which stands at US$89.36M This suggests that, on average, NMC Health has been able to increasingly grow its net income over the past couple of years as well.How has it been able to do this? Let’s see if it is merely due to an industry uplift, or if NMC Health has experienced some company-specific growth. The ascend in earnings seems to be driven by a solid top-line increase overtaking its growth rate of costs. Though this has caused a margin contraction, it has made NMC Health more profitable. Viewing growth from a sector-level, the UK healthcare industry has been enduring some headwinds over the previous twelve months, leading to an average earnings drop of -21.96%. This is a momentous change, given that the industry has constantly been delivering a a solid growth of 21.08% in the past five years. This means whatever recent headwind the industry is facing, the impact on NMC Health has been softer relative to its peers.
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 NMC Health gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research NMC Health to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NMC’s future growth? Take a look at our free research report of analyst consensus for NMC’s outlook.
- Financial Health: Is NMC’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.
- 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.