Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Worldsec Limited’s (LSE:WSL) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Worldsec
Could WSL beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, 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 enables me to analyze many different companies on a similar basis, using new information. For Worldsec, its most recent bottom-line is -$0.3M, which, relative to last year’s level, has become less negative. Given that these figures may be relatively short-term thinking, I have calculated an annualized five-year figure for Worldsec’s net income, which stands at -$0.4M. This suggests that, while net income is negative, it has become less negative over the years.
Additionally, we can evaluate Worldsec’s loss by researching what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last few years has grown by 36.22%, indicating that Worldsec is in a high-growth phase with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Scanning growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 22.59% over the past year, and 13.06% over the past couple of years. This means that, although Worldsec is presently loss-making, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Worldsec may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Worldsec to get a better picture of the stock by looking at:
1. Financial Health: Is WSL’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.
2. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.