Telecom Plus PLC (LON:TEP): Has Recent Earnings Growth Beaten Long-Term Trend?

After reading Telecom Plus PLC's (LSE:TEP) latest earnings update (30 September 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 TEP has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. See our latest analysis for Telecom Plus

How TEP fared against its long-term earnings performance and its industry

For the most up-to-date info, I 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 enables me to analyze different stocks on a similar basis, using the latest information. For Telecom Plus, its most recent earnings (trailing twelve month) is UK£31.08M, which compared to last year’s figure, has risen by 10.39%. Since these values are fairly short-term, I’ve determined an annualized five-year value for TEP's net income, which stands at UK£27.46M This shows that, generally, Telecom Plus has been able to steadily raise its net income over the past few years as well.

How has it been able to do this? Let's take a look at if it is solely due to industry tailwinds, or if Telecom Plus has seen some company-specific growth. The ascend in earnings seems to be propelled by a solid top-line increase beating its growth rate of costs. Though this resulted in a margin contraction, it has made Telecom Plus more profitable. Viewing growth from a sector-level, the UK integrated utilities industry has been enduring some headwinds in the previous year, leading to average earnings dropping by more than half. This is a a strong change, given that the industry has been delivering a relatively flat growth rate over the previous couple of years. This shows that any near-term headwind the industry is facing, the impact on Telecom Plus has been softer relative to its peers.

What does this mean?

Telecom Plus's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Telecom Plus 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 Telecom Plus to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for TEP’s future growth? Take a look at our free research report of analyst consensus for TEP’s outlook.
• 2. Financial Health: Is TEP’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 30 September 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.