Dewhurst plc (AIM:DWHT)’s Earnings Grew 18.4%, Is It Enough?
After reading Dewhurst plc’s (AIM:DWHT) most recent earnings announcement (31 March 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for DWHT
How DWHT fared against its long-term earnings performance and its industry
For the purpose of this commentary, I like to 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 method allows me to examine various companies in a uniform manner using new information. Dewhurst’s most recent earnings is £4M, which, in comparison to the prior year’s figure, has climbed up by 19.02%. Since these figures are somewhat short-term thinking, I’ve computed an annualized five-year figure for DWHT’s earnings, which stands at £3M. This means generally, Dewhurst has been able to consistently grow its bottom line over the last few years as well.
How has it been able to do this? Let’s see if it is solely attributable to an industry uplift, or if Dewhurst has experienced some company-specific growth. Over the past few years, Dewhurst increased its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the UK electrical equipment industry has been growing its average earnings by double-digit 18.36% over the past twelve months, and a less exciting 7.08% over the past couple of years. This means any uplift the industry is gaining from, Dewhurst is capable of leveraging this to its advantage.
What does this mean?
Though Dewhurst’s past data is helpful, it is only one aspect of my investment thesis. While Dewhurst has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Dewhurst to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for DWHT’s future growth? Take a look at our free research report of analyst consensus for DWHT’s outlook.
2. Financial Health: Is DWHT’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.
