Macquarie Media Limited (ASX:MRN): Has Recent Earnings Growth Beaten Long-Term Trend?
When Macquarie Media Limited’s (ASX:MRN) announced its latest earnings (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Macquarie Media’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not MRN actually performed well. Below is a quick commentary on how I see MRN has performed. Check out our latest analysis for Macquarie Media
How Well Did MRN Perform?
I look at 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 examine many different companies on a more comparable basis, using the latest information. For Macquarie Media, its latest earnings (trailing twelve month) is A$17.3M, which, relative to the previous year’s figure, has risen by 21.36%. Since these values are somewhat short-term thinking, I have computed an annualized five-year value for Macquarie Media’s net income, which stands at A$11.1M. This suggests that, generally, Macquarie Media has been able to consistently raise its bottom line over the past couple of years as well.
How has it been able to do this? Let’s see if it is merely a result of industry tailwinds, or if Macquarie Media has experienced some company-specific growth. In the past few years, Macquarie Media expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the Australian industry industry has been enduring some headwinds over the previous year, leading to an average earnings drop of -6.33%. This is a momentous change, given that the industry has constantly been delivering a a notable growth of 31.48% in the previous five years. This suggests that whatever near-term headwind the industry is enduring, Macquarie Media is less exposed compared to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Macquarie Media gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Macquarie Media to get a better picture of the stock by looking at:
1. Financial Health: Is MRN’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.
2. Valuation: What is MRN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MRN is currently mispriced by the market.
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.
