Analyzing BMTC Group Inc’s (TSX:GBT) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess GBT’s recent performance announced on 30 September 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for BMTC Group
How Well Did GBT Perform?
I prefer to 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 allows me to analyze different stocks in a uniform manner using new information. For BMTC Group, the most recent earnings is CA$49.3M, which compared to the previous year’s figure, has jumped up by 16.26%. Given that these values are somewhat short-term thinking, I have created an annualized five-year value for BMTC Group’s net income, which stands at CA$52.3M. This means while earnings increased from last year’s level, over the longer term, BMTC Group’s earnings have been declining on average.
What could be happening here? Let’s examine what’s going on with margins and whether the entire industry is facing the same headwind. Although revenue growth in the past few years, has been negative, earnings growth has been deteriorating by even more, implying that BMTC Group has been increasing its expenses. This hurts margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the Canadian specialty retail industry has been growing its average earnings by double-digit 17.95% over the previous twelve months, and a more muted 2.44% over the past couple of years. This means that whatever tailwind the industry is enjoying, BMTC Group has not been able to leverage it as much as its average peer.
What does this mean?
Though BMTC Group’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook. There could be factors that are impacting the entire industry hence the high industry growth rate over the same time frame. I suggest you continue to research BMTC Group to get a better picture of the stock by looking at:
1. Financial Health: Is GBT’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.
2. Valuation: What is GBT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether GBT is currently mispriced by the market.
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.