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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 Argo Investments Limited’s (ASX:ARG) 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. See our latest analysis for Argo Investments
How Did ARG’s Recent Performance Stack Up Against Its Past?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess various companies on a similar basis, using new information. For Argo Investments, its most recent trailing-twelve-month earnings is AU$217.94M, which, in comparison to the previous year’s level, has increased by a somewhat muted 5.72%. Since these figures are fairly short-term thinking, I’ve created an annualized five-year figure for Argo Investments’s earnings, which stands at AU$196.69M This means generally, Argo Investments has been able to consistently raise its net income over the past few years as well.
What’s enabled this growth? Well, let’s take a look at whether it is only a result of an industry uplift, or if Argo Investments has experienced some company-specific growth. Over the last few years, Argo Investments expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the Australian capital markets industry has been growing, albeit, at a muted single-digit rate of 8.71% over the past twelve months, and a substantial 16.58% over the past five. This shows that whatever uplift the industry is enjoying, Argo Investments has not been able to gain as much as its average peer.
What does this mean?
Though Argo Investments’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Argo Investments gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Argo Investments to get a more holistic view of the stock by looking at:
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1. Financial Health: Is ARG’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.
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2. Valuation: What is ARG worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ARG is currently mispriced by the market.
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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 31 December 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.