Does Franchise Brands plc’s (LON:FRAN) Past Performance Indicate A Weaker Future?
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 Franchise Brands plc’s (AIM:FRAN) 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. View our latest analysis for Franchise Brands
Was FRAN’s recent earnings decline worse than the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess different stocks in a uniform manner using the most relevant data points. For Franchise Brands, its most recent bottom-line (trailing twelve month) is -UK£288.00K, which compared to the prior year’s level, has turned from positive to negative. Given that these figures are somewhat myopic, I’ve calculated an annualized five-year figure for Franchise Brands’s net income, which stands at UK£573.18K.
We can further assess Franchise Brands’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Franchise Brands’s top-line has risen by 20.53% on average, implying that the company is in a high-growth phase with expenses shooting ahead of revenues, leading to annual losses. Inspecting growth from a sector-level, the UK consumer services industry has been growing, albeit, at a subdued single-digit rate of 9.05% in the previous twelve months, . This is a turnaround from a volatile drop of -17.50% in the previous few years. This means that whatever tailwind the industry is enjoying, Franchise Brands has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Franchise Brands may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Franchise Brands to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for FRAN’s future growth? Take a look at our free research report of analyst consensus for FRAN’s outlook.
2. Financial Health: Is FRAN’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 30 June 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.
