Does Numis Corporation Plc’s (AIM:NUM) -17.3% EPS Decline Reflect A Long-Term Trend?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Numis Corporation Plc (AIM:NUM) useful as an attempt to give more color around how Numis is currently performing. View our latest analysis for Numis
Was NUM’s recent earnings decline worse than the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I 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 blend allows me to analyze many different companies on a more comparable basis, using the most relevant data points. Numis’s most recent bottom-line is £22M, which, relative to last year’s figure, has declined by -17.32%. Given that these values are relatively myopic, I have determined an annualized five-year figure for Numis’s net income, which stands at £14M. This shows that though earnings declined against the previous year, over the past couple of years, Numis’s profits have been rising on average.
What’s enabled this growth? Let’s see if it is only because of industry tailwinds, or if Numis has seen some company-specific growth. Over the last few years, Numis expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the UK capital markets industry has been growing its average earnings by double-digit 18.82% over the prior year, and 12.40% over the past five years. This means that any uplift the industry is profiting from, Numis has not been able to leverage it as much as its average peer.
What does this mean?
Though Numis’s past data is helpful, it is only one aspect of my investment thesis. Companies are profitable, but have volatile earnings, can have many factors affecting its business. I suggest you continue to research Numis to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NUM’s future growth? Take a look at our free research report of analyst consensus for NUM’s outlook.
2. Financial Health: Is NUM’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.
