How Does Playtech plc’s (LON:PTEC) Earnings Growth Stack Up Against Industry Performance?
Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Playtech plc’s (LSE:PTEC) 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 Playtech
Were PTEC’s earnings stronger than its past performances and the industry?
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 blend enables me to assess different stocks on a more comparable basis, using new information. For Playtech, its latest trailing-twelve-month earnings is €233.91M, which, against the prior year’s level, has risen by more than double. Given that these figures are relatively myopic, I’ve computed an annualized five-year value for PTEC’s earnings, which stands at €178.42M This means on average, Playtech has been able to gradually improve its net income over the past few years as well.
How has it been able to do this? Let’s see whether it is only attributable to industry tailwinds, or if Playtech has seen some company-specific growth. The rise in earnings seems to be supported by a substantial top-line increase outpacing its growth rate of costs. Though this resulted in a margin contraction, it has made Playtech more profitable. Looking at growth from a sector-level, the UK software industry has been growing, albeit, at a subdued single-digit rate of 9.93% over the past twelve months, and 4.77% over the past half a decade. This shows that any uplift the industry is profiting from, Playtech is able to amplify this to its advantage.
What does this mean?
Playtech’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 recommend you continue to research Playtech to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PTEC’s future growth? Take a look at our free research report of analyst consensus for PTEC’s outlook.
2. Financial Health: Is PTEC’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.
