Did RELX PLC’s (LON:REL) Recent Earnings Growth Beat The Trend?
Measuring RELX PLC’s (LSE:REL) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess REL’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for RELX
How REL fared against its long-term earnings performance and its industry
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to analyze different companies on a more comparable basis, using new information. “For RELX, its “, latest earnings is £1,294.0M, which compared to the previous year’s figure, has moved up by 17.42%. Since these figures may be relatively short-term, I’ve created an annualized five-year figure for REL’s net income, which stands at £979.4M. This shows that, generally, RELX has been able to steadily improve its profits over the last couple of years as well.
How has it been able to do this? Let’s take a look at if it is merely attributable to an industry uplift, or if RELX has seen some company-specific growth. In the past few years, RELX expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the UK professional services industry has been growing, albeit, at a unexciting single-digit rate of 3.53% over the prior twelve months, and 8.02% over the previous five years. This shows that whatever near-term headwind the industry is facing, the impact on RELX has been softer relative to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While RELX has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research RELX to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for REL’s future growth? Take a look at our free research report of analyst consensus for REL’s outlook.
2. Financial Health: Is REL’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.
