Does Jarvis Securities plc’s (LON:JIM) 22.11% Earnings Growth Make It An Outperformer?
In this article, I will take a look at Jarvis Securities plc’s (AIM:JIM) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of JIM’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Jarvis Securities
How JIM fared against its long-term earnings performance and its industry
I look at 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 blend enables me to examine various companies in a uniform manner using new information. For Jarvis Securities, its latest earnings (trailing twelve month) is UK£3.55M, which, against the prior year’s figure, has risen by 22.11%. Since these figures are fairly short-term thinking, I have determined an annualized five-year figure for Jarvis Securities’s net income, which stands at UK£2.39M This means that, generally, Jarvis Securities has been able to consistently raise its profits over the last couple of years as well.
What’s enabled this growth? Let’s see whether it is merely due to industry tailwinds, or if Jarvis Securities has seen some company-specific growth. Over the past few years, Jarvis Securities expanded its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 24.33% over the past twelve months, and 17.78% over the past half a decade. This means that whatever tailwind the industry is benefiting from, Jarvis Securities has not been able to realize the gains unlike its average peer.
What does this mean?
Jarvis Securities’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Jarvis Securities has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Jarvis Securities to get a better picture of the stock by looking at:
1. Financial Health: Is JIM’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 JIM 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 JIM 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 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.
