After reading SRG Limited’s (ASX:SRG) 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 SRG’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for SRG
Commentary On SRG’s Past Performance
To account for any quarterly or half-yearly updates, 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 method allows me to analyze many different companies in a uniform manner using the latest information. “For SRG, its “, most recent earnings is A$7.8M, which, relative to the prior year’s figure, has increased by 26.27%. Since these values may be fairly short-term, I’ve computed an annualized five-year figure for SRG’s earnings, which stands at A$5.5M. This shows that, on average, SRG has been able to increasingly grow its bottom line over the last couple of years as well.
What’s enabled this growth? Let’s take a look at if it is solely owing to industry tailwinds, or if SRG has experienced some company-specific growth. Though both top-line and bottom-line growth rates in the last few years, were, on average, negative, earnings were more so. While this resulted in a margin contraction, it has lessened SRG’s earnings contraction. Inspecting growth from a sector-level, the Australian construction and engineering industry has been enduring some headwinds over the previous couple of years, leading to an average earnings drop of -10.60% in the most recent year. This means that whatever near-term headwind the industry is facing, SRG is less exposed compared to its peers.
What does this mean?
Though SRG’s past data is helpful, it is only one aspect of my investment thesis. While SRG has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research SRG to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SRG’s future growth? Take a look at our free research report of analyst consensus for SRG’s outlook.