Assessing Legendary Investments plc’s (AIM:LEG) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Legendary Investments is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its capital markets industry peers. View our latest analysis for Legendary Investments
Did LEG perform worse than its track record and 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 allows me to examine many different companies on a similar basis, using the latest information. For Legendary Investments, the most recent twelve-month earnings -£0.3M, which, against last year’s level, has turned from positive to negative. Given that these figures may be relatively short-term thinking, I’ve estimated an annualized five-year figure for LEG’s net income, which stands at £0.3M.
Additionally, we can analyze Legendary Investments’s loss by researching what has been happening in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over last couple of years has grew by 29.14%, indicating that Legendary Investments is in a high-growth phase with expenses racing ahead elevated top-line growth rates. Eyeballing growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 21.16% over the previous twelve months, and 12.81% over the past five. This means that any uplift the industry is profiting from, Legendary Investments has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Legendary Investments may be facing and whether management guidance has steadily been met in the past. You should continue to research Legendary Investments to get a better picture of the stock by looking at:
1. Financial Health: Is LEG’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.