For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Elia System Operator SA’s (ENXTBR:ELI) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Elia System Operator
Could ELI beat the long-term trend and outperform its industry?
I prefer to 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 enables me to analyze different companies in a uniform manner using the most relevant data points. For Elia System Operator, its most recent earnings (trailing twelve month) is €229.10M, which, relative to the prior year’s level, has jumped up by 27.35%. Since these figures may be fairly short-term, I’ve calculated an annualized five-year figure for ELI’s net income, which stands at €175.63M This means that, on average, Elia System Operator has been able to increasingly raise its bottom line over the past couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is solely a result of industry tailwinds, or if Elia System Operator has experienced some company-specific growth. In the last few years, Elia System Operator expanded bottom-line, while its top-line fell, by effectively controlling its costs. This resulted in to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the BE electric utilities industry has been growing its average earnings by double-digit 10.43% in the prior year, and a more subdued 4.46% over the past five years. This means that whatever tailwind the industry is enjoying, Elia System Operator is able to leverage this to its advantage.
What does this mean?
Elia System Operator’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Elia System Operator 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 Elia System Operator to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ELI’s future growth? Take a look at our free research report of analyst consensus for ELI’s outlook.
- Financial Health: Is ELI’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 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.