Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess The Vitec Group plc’s (LSE:VTC) 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. View our latest analysis for Vitec Group
Could VTC beat the long-term trend and outperform its industry?
I look at 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 blend enables me to examine different companies on a more comparable basis, using the most relevant data points. Vitec Group’s most recent twelve-month earnings is £14.4M, which, against last year’s figure, has increased by 13.39%. Since these figures are relatively myopic, I have calculated an annualized five-year figure for VTC’s earnings, which stands at £12.6M. This suggests that, on average, Vitec Group has been able to consistently grow its earnings over the last couple of years as well.
How has it been able to do this? Let’s see if it is solely attributable to industry tailwinds, or if Vitec Group has seen some company-specific growth. In the past few years, Vitec Group top-line expansion has overtaken earnings and the growth rate of expenses. Though this resulted in a margin contraction, it has cushioned Vitec Group’s earnings contraction. Scanning growth from a sector-level, the UK household durables industry has been growing its average earnings by double-digit 13.14% in the previous twelve months, and 24.99% over the past couple of years. This means that whatever uplift the industry is gaining from, Vitec Group is capable of leveraging this to its advantage.
What does this mean?
Though Vitec Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Vitec Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Vitec Group to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for VTC’s future growth? Take a look at our free research report of analyst consensus for VTC’s outlook.
2. Financial Health: Is VTC’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.