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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Erbud SA. (WSE:ERB) useful as an attempt to give more color around how Erbud is currently performing. View our latest analysis for Erbud
How Well Did ERB Perform?
To account for any quarterly or half-yearly updates, I use 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 allows me to assess different stocks in a uniform manner using new information. For Erbud, its latest trailing-twelve-month earnings is ZŁ22.56M, which, against the prior year’s figure, has dropped by a large -37.30%. Given that these figures are relatively nearsighted, I’ve calculated an annualized five-year value for Erbud’s net income, which stands at ZŁ15.54M This means that despite the fact that earnings growth was negative from last year, over a longer period of time, Erbud’s earnings have been increasing on average.
What’s enabled this growth? Well, let’s take a look at whether it is merely attributable to industry tailwinds, or if Erbud has seen some company-specific growth. In the past couple of years, Erbud expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Looking at growth from a sector-level, the PL construction industry has been growing, albeit, at a subdued single-digit rate of 9.93% over the past year, and a flatter -1.53% over the past five years. This suggests that, in the recent industry expansion, Erbud has not been able to leverage it as much as its industry peers.
What does this mean?
Erbud’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research Erbud to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for ERB’s future growth? Take a look at our free research report of analyst consensus for ERB’s outlook.
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Financial Health: Is ERB’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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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.