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The Go-Ahead Group plc (LSE:GOG): Does -4.7% EPS Drop In A Year Reflect The Long-Term Trend?

Examining how The Go-Ahead Group plc (LSE:GOG) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Go-Ahead Group is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its road and rail industry peers. See our latest analysis for GOG

Was GOG weak performance lately part of a long-term decline?

For the purpose of this commentary, I like to 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 enables me to examine various companies in a uniform manner using the latest information. For Go-Ahead Group, the most recent bottom-line is £89.1M, which, in comparison to the prior year’s level, has fallen by -4.78%. Given that these figures may be somewhat myopic, I have calculated an annualized five-year value for GOG’s earnings, which stands at £63.6M. This means despite the fact that earnings declined against the previous year, over the long run, Go-Ahead Group’s earnings have been rising on average.

LSE:GOG Income Statement Dec 5th 17
LSE:GOG Income Statement Dec 5th 17

What’s enabled this growth? Well, let’s take a look at whether it is only a result of an industry uplift, or if Go-Ahead Group has experienced some company-specific growth. The hike in earnings seems to be driven by a solid top-line increase outstripping its growth rate of expenses. Though this has caused a margin contraction, it has made Go-Ahead Group more profitable. Looking at growth from a sector-level, the UK road and rail industry has been relatively flat in terms of earnings growth over the past few years. This means that any headwind the industry is facing, it’s hitting Go-Ahead Group harder than its peers.

What does this mean?

Go-Ahead Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Go-Ahead Group to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for GOG’s future growth? Take a look at our free research report of analyst consensus for GOG’s outlook.

2. Financial Health: Is GOG’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.

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