After looking at Scout24 AG’s (DB:G24) latest earnings announcement (31 March 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Scout24
Could G24 beat the long-term trend and outperform its industry?
I like to use 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 technique allows me to analyze different stocks on a more comparable basis, using the latest information. For Scout24, its most recent earnings (trailing twelve month) is €116.88M, which, against last year’s figure, has increased by 49.36%. Given that these values may be fairly nearsighted, I have estimated an annualized five-year value for Scout24’s earnings, which stands at €44.58M This means generally, Scout24 has been able to increasingly grow its net income over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is merely because of an industry uplift, or if Scout24 has seen some company-specific growth. In the past few years, Scout24 expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the DE internet industry has been growing its average earnings by double-digit 17.53% over the previous twelve months, and 18.94% over the past five years. This means any tailwind the industry is benefiting from, Scout24 is capable of leveraging this to its advantage.
What does this mean?
Though Scout24’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Scout24 gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Scout24 to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for G24’s future growth? Take a look at our free research report of analyst consensus for G24’s outlook.
- Financial Health: Is G24’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.
- 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 March 2018. 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.