How Does Legal & General Group Plc’s (LSE:LGEN) EPS Growth Stack Up Against Industry Performance?
Measuring Legal & General Group Plc’s (LSE:LGEN) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess LGEN’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. See our latest analysis for LGEN
Could LGEN beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to use 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 method enables me to analyze different companies on a similar basis, using the latest information. For Legal & General Group, the most recent earnings is £1,536.0M, which, in comparison to the prior year’s level, has moved up by 27.57%. Since these figures are somewhat short-term, I have estimated an annualized five-year figure for Legal & General Group’s earnings, which stands at £969.3M. This means that, on average, Legal & General Group has been able to steadily raise its net income over the past few years as well.
What’s enabled this growth? Let’s take a look at if it is solely attributable to an industry uplift, or if Legal & General Group has seen some company-specific growth. In the past couple of years, Legal & General Group increased its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Viewing growth from a sector-level, the UK insurance industry has been relatively flat in terms of earnings growth over the previous couple of years. This suggests that any near-term headwind the industry is enduring, Legal & General Group is relatively better-cushioned than its peers.
What does this mean?
Legal & General Group’s track record can be a valuable insight into its earnings performance, but it certainly 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? I suggest you continue to research Legal & General Group to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for LGEN’s future growth? Take a look at our free research report of analyst consensus for LGEN’s outlook.
2. Financial Health: Is LGEN’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 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.
