Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Meggitt PLC’s (LSE:MGGT) 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 Meggitt
How MGGT fared against its long-term earnings performance and its industry
I use the ‘latest twelve-month’ data, 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 method allows me to examine different stocks on a similar basis, using the latest information. “For Meggitt, its “, most recent earnings is £294.8M, which, against the previous year’s figure, has risen by more than double. Given that these values are fairly myopic, I have computed an annualized five-year value for Meggitt’s net income, which stands at £195.8M. This means that, generally, Meggitt has been able to consistently improve its earnings over the past few years as well.
What’s the driver of this growth? Let’s take a look at if it is merely due to an industry uplift, or if Meggitt has seen some company-specific growth. The rise in earnings seems to be driven by a substantial top-line increase outstripping its growth rate of expenses. Though this resulted in a margin contraction, it has made Meggitt more profitable. Viewing growth from a sector-level, the UK aerospace and defense industry has been growing its average earnings by double-digit 30.88% in the past year, and a flatter -0.37% over the past five. This means in the recent industry expansion, Meggitt is able to amplify this to its advantage.
What does this mean?
Though Meggitt’s past data is helpful, it is only one aspect of my investment thesis. While Meggitt has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Meggitt to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MGGT’s future growth? Take a look at our free research report of analyst consensus for MGGT’s outlook.
2. Financial Health: Is MGGT’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.
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 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.