After looking at FSA Group Limited’s (ASX:FSA) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 FSA Group’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for FSA Group
Were FSA’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, I like to 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 technique allows me to examine different companies on a more comparable basis, using the latest information. For FSA Group, its latest earnings (trailing twelve month) is A$15.4M, which, in comparison to the prior year’s figure, has climbed up by 44.06%. Since these values may be fairly myopic, I have determined an annualized five-year value for FSA Group’s earnings, which stands at A$11.4M. This shows that, on average, FSA Group has been able to gradually grow its net income over the last few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is solely attributable to an industry uplift, or if FSA Group has seen some company-specific growth. In the last few years, FSA Group grew its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Eyeballing growth from a sector-level, the Australian consumer finance industry has been growing its average earnings by double-digit 38.21% over the previous year, and 11.55% over the past half a decade. This means that whatever uplift the industry is enjoying, FSA 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. While FSA Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research FSA Group to get a better picture of the stock by looking at:
-
1. Future Outlook: What are well-informed industry analysts predicting for FSA’s future growth? Take a look at our free research report of analyst consensus for FSA’s outlook.
-
2. Financial Health: Is FSA’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 June 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.