How Firstgroup plc’s (LSE:FGP) EPS Growth Stacks Up Against Industry Performance
After looking at Firstgroup plc’s (LSE:FGP) latest earnings update (30 September 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. 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 an important aspect. In this article I briefly touch on my key findings. See our latest analysis for FGP
How Did FGP’s Recent Performance Stack Up Against Its Past?
To account for any quarterly or half-yearly updates, I 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 method enables me to analyze many different companies in a uniform manner using new information. Firstgroup’s most recent twelve-month earnings is £105M, which compared to the previous year’s figure, Given that these figures are relatively nearsighted, I’ve determined an annualized five-year value for FGP’s net income, which stands at £86M. This means on average, Firstgroup has been able to increase its earnings over the past few years.
How has it been able to do this? Well, let’s take a look at whether it is solely attributable to industry tailwinds, or if Firstgroup 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 has caused a margin contraction, it has cushioned Firstgroup’s earnings contraction. Looking at growth from a sector-level, the UK road and rail industry has been relatively flat in terms of earnings growth over the past couple of years. This shows that any headwind the industry is facing, it’s hitting Firstgroup harder than its peers.
What does this mean?
Firstgroup’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Firstgroup has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Firstgroup to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for FGP’s future growth? Take a look at our free research report of analyst consensus for FGP’s outlook.
2. Financial Health: Is FGP’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.
