Did Brambles Limited’s (ASX:BXB) Recent Earnings Growth Beat The Trend?
Examining Brambles Limited’s (ASX:BXB) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BXB’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements. See our latest analysis for Brambles
Could BXB beat the long-term trend and outperform its industry?
I look at 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 enables me to assess different stocks in a uniform manner using the latest information. For Brambles, its most recent earnings (trailing twelve month) is US$730.70M, which, in comparison to the prior year’s figure, has moved up by a substantial 56.67%. Given that these figures may be relatively short-term thinking, I’ve created an annualized five-year figure for BXB’s net income, which stands at US$564.70M This means that, generally, Brambles has been able to gradually improve its profits over the past few years as well.
How has it been able to do this? Let’s take a look at if it is only a result of industry tailwinds, or if Brambles has seen some company-specific growth. Over the last few years, Brambles expanded bottom-line, while its top-line declined, by successfully controlling its costs. This has led to to a margin expansion and profitability over time. Scanning growth from a sector-level, the Australian commercial services industry has been growing its average earnings by double-digit 26.00% over the previous twelve months, and a more subdued 8.77% over the past half a decade. This means that whatever tailwind the industry is enjoying, Brambles is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Brambles to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BXB’s future growth? Take a look at our free research report of analyst consensus for BXB’s outlook.
2. Financial Health: Is BXB’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 trailing twelve months from 31 December 2017. 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.
