After reading Pacific Smiles Group Limited’s (ASX:PSQ) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Pacific Smiles Group’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Pacific Smiles Group
Have PSQ’s earnings improved against past performances and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to assess different stocks on a more comparable basis, using the latest information. “For Pacific Smiles Group, its “, most recent bottom-line is A$10.0M, which, against the prior year’s figure, Given that these figures may be relatively nearsighted, I’ve computed an annualized five-year figure for Pacific Smiles Group’s earnings, which stands at A$8.1M. This shows that, on average, Pacific Smiles Group has been able to increase its earnings over the last couple of years.
What’s the driver of this growth? Well, let’s take a look at whether it is merely owing to an industry uplift, or if Pacific Smiles Group has seen some company-specific growth. In the past couple of years, Pacific Smiles Group grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian healthcare industry has been growing, albeit, at a unexciting single-digit rate of 7.70% over the previous twelve months, and a substantial 13.02% over the past couple of years. This means that any uplift the industry is enjoying, Pacific Smiles Group has not been able to leverage it as much as its average peer.
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 Pacific Smiles Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Pacific Smiles Group to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PSQ’s future growth? Take a look at our free research report of analyst consensus for PSQ’s outlook.