Should Ashley House PLC’s (AIM:ASH) Earnings Decline In Recent Times Worry You?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Ashley House PLC (AIM:ASH) useful as an attempt to give more color around how Ashley House is currently performing. View our latest analysis for Ashley House
Was ASH weak performance lately part of a long-term decline?
I prefer 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 enables me to assess different stocks on a more comparable basis, using new information. For Ashley House, the latest earnings is £0M, which, against the prior year’s figure, has sunken by a substantial -77.73%. Since these figures may be fairly nearsighted, I’ve created an annualized five-year figure for Ashley House’s earnings, which stands at -£6M. This shows that while earnings growth was negative against the prior year, over the long run, Ashley House’s profits have been increasing on average.
What’s the driver of this growth? Well, let’s take a look at if it is merely a result of industry tailwinds, or if Ashley House has seen some company-specific growth. Over the past few years, Ashley House expanded bottom-line, while its top-line fell, by successfully controlling its costs. This resulted in to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the UK healthcare providers and services industry has been growing, albeit, at a subdued single-digit rate of 5.06% over the past twelve months, and a substantial 11.72% over the past five years. This shows that any tailwind the industry is enjoying, Ashley House has not been able to realize the gains unlike its average peer.
What does this mean?
Though Ashley House’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Ashley House to get a more holistic view of the stock by looking at:
1. Financial Health: Is ASH’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.
