Understanding how Katana Capital Limited (ASX:KAT) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Katana Capital is doing by comparing its latest earnings with its long-term trend as well as the performance of its capital markets industry peers. View our latest analysis for Katana Capital
Were KAT’s earnings stronger than its past performances and the industry?
I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to assess many different companies on a more comparable basis, using the latest information. “For Katana Capital, its “, most recent earnings is A$0.9M, which, in comparison to the previous year’s level, has increased by a significant 56.30%. Since these figures may be somewhat nearsighted, I have determined an annualized five-year figure for Katana Capital’s earnings, which stands at A$0.8M. This means generally, Katana Capital has been able to gradually improve its profits over the last couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is only because of industry tailwinds, or if Katana Capital has seen some company-specific growth. In the past few years, Katana Capital expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Looking at 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 previous twelve months, and 8.12% over the previous five years. This shows that any recent headwind the industry is enduring, the impact on Katana Capital has been softer relative to its peers.
What does this mean?
Katana Capital’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Katana Capital has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Katana Capital to get a better picture of the stock by looking at:
1. Financial Health: Is KAT’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.