Did George Weston Limited’s (TSE:WN) Recent Earnings Growth Beat The Trend?
Today I will examine George Weston Limited’s (TSX:WN) latest earnings update (31 December 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of WN’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. Check out our latest analysis for George Weston
Were WN’s earnings stronger than its past performances and the industry?
To account for any quarterly or half-yearly updates, I 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 technique allows me to examine many different companies on a more comparable basis, using the most relevant data points. For George Weston, its latest earnings (trailing twelve month) is CA$715.00M, which, against last year’s level, has risen by 41.30%. Since these values are relatively short-term thinking, I have estimated an annualized five-year figure for WN’s net income, which stands at CA$468.18M This means that, on average, George Weston has been able to steadily grow its profits over the last few years as well.
How has it been able to do this? Let’s take a look at if it is solely because of industry tailwinds, or if George Weston has experienced some company-specific growth. The ascend in earnings seems to be bolstered by a solid top-line increase beating its growth rate of costs. Though this resulted in a margin contraction, it has made George Weston more profitable. Eyeballing growth from a sector-level, the Canadian consumer retailing industry has been growing its average earnings by double-digit 21.39% over the previous twelve months, and a less exciting 2.29% over the past half a decade. This means that whatever uplift the industry is enjoying, George Weston is able to amplify this to its advantage.
What does this mean?
Though George Weston’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as George Weston gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research George Weston to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for WN’s future growth? Take a look at our free research report of analyst consensus for WN’s outlook.
2. Financial Health: Is WN’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.
