Today I will take a look at Diversified United Investment Limited’s (ASX:DUI) most recent earnings update (30 June 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the capital markets industry performed. As an investor, I find it beneficial to assess DUI’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Diversified United Investment
How DUI fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess different stocks in a uniform manner using new information. “For Diversified United Investment, its “, most recent twelve-month earnings is A$32.8M, which compared to the previous year’s figure, has risen by a somewhat unexciting 7.52%. Since these values may be fairly myopic, I’ve computed an annualized five-year value for DUI’s net income, which stands at A$26.6M. This means that, generally, Diversified United Investment has been able to steadily grow its earnings over the last couple of years as well.
What’s the driver of this growth? Let’s see whether it is merely because of an industry uplift, or if Diversified United Investment has experienced some company-specific growth. Over the last few years, Diversified United Investment grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian capital markets industry has been growing, albeit, at a unexciting single-digit rate of 3.16% in the prior twelve months, and 8.12% over the past five years. This means that whatever recent headwind the industry is facing, the impact on Diversified United Investment has been softer relative to its peers.
What does this mean?
Though Diversified United Investment’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Diversified United Investment gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Diversified United Investment to get a more holistic view of the stock by looking at: