For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Acadian Timber Corp’s (TSX:ADN) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for Acadian Timber
Did ADN’s recent earnings growth beat the long-term trend 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 enables me to analyze different companies in a uniform manner using new information. For Acadian Timber, its most recent earnings (trailing twelve month) is CA$28.05M, which, relative to the previous year’s figure, has escalated by a substantial 71.35%. Given that these figures may be somewhat myopic, I’ve estimated an annualized five-year value for ADN’s net income, which stands at CA$18.82M This shows that, generally, Acadian Timber has been able to consistently grow its profits over the past few years as well.
How has it been able to do this? Let’s see if it is merely owing to an industry uplift, or if Acadian Timber has experienced some company-specific growth. Over the past few years, Acadian Timber grew its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the Canadian forestry industry has been amplifying average earnings growth of 64.62% over the past year, and a solid 21.10% over the past half a decade. This shows that whatever tailwind the industry is enjoying, Acadian Timber is capable of amplifying 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 Acadian Timber to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ADN’s future growth? Take a look at our free research report of analyst consensus for ADN’s outlook.
- Financial Health: Is ADN’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.
- 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 March 2018. 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.