Does Wm Morrison Supermarkets PLC’s (LON:MRW) Past Performance Indicate A Stronger Future?
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 Wm Morrison Supermarkets PLC (LSE:MRW) useful as an attempt to give more color around how Wm Morrison Supermarkets is currently performing. View our latest analysis for Wm Morrison Supermarkets
Commentary On MRW’s Past Performance
I prefer 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 enables me to assess different stocks in a uniform manner using the latest information. For Wm Morrison Supermarkets, its most recent trailing-twelve-month earnings is £356.0M, which, relative to the previous year’s level, has escalated by a non-trivial 58.23%. Given that these figures may be relatively myopic, I have calculated an annualized five-year figure for MRW’s net income, which stands at £177.4M. This means that, generally, Wm Morrison Supermarkets has been able to consistently raise its bottom line over the past couple of years as well.
What’s the driver of this growth? Let’s see if it is merely a result of industry tailwinds, or if Wm Morrison Supermarkets has seen some company-specific growth. Although both top-line and bottom-line growth rates in the past few years, were, on average, negative, earnings were more so. While this brought about a margin contraction, it has moderated Wm Morrison Supermarkets’s earnings contraction. Scanning growth from a sector-level, the UK consumer retailing industry has been growing its average earnings by double-digit 19.95% over the past year, . This is a change from a volatile drop of -9.50% in the past few years. This shows that, in the recent industry expansion, Wm Morrison Supermarkets is able to leverage this to its advantage.
What does this mean?
Wm Morrison Supermarkets’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Wm Morrison Supermarkets gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Wm Morrison Supermarkets to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MRW’s future growth? Take a look at our free research report of analyst consensus for MRW’s outlook.
2. Financial Health: Is MRW’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 July 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.
