OPUS Group Limited (ASX:OPG): Does -22.1% EPS Decline Lately Make It An Underperformer?
Assessing OPUS Group Limited’s (ASX:OPG) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess OPG’s recent performance announced on 30 June 2017 and evaluate these figures to its longer term trend and industry movements. View our latest analysis for OPUS Group
Was OPG weak performance lately part of a long-term decline?
I prefer to use the ‘latest twelve-month’ data, 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 analyze various companies on a similar basis, using the most relevant data points. For OPUS Group, the most recent twelve-month earnings is A$6M, which, against the previous year’s figure, has plunged by -22.58%. Since these figures may be somewhat short-term, I have determined an annualized five-year value for OPG’s net income, which stands at -A$9M. This shows that while earnings growth was negative from the prior year, in the long run, OPUS Group’s profits have been rising on average.
What’s enabled this growth? Let’s see whether it is only due to industry tailwinds, or if OPUS Group has seen some company-specific growth. In the past couple of years, OPUS Group grew bottom-line, while its top-line fell, by efficiently controlling its costs. This has led to to a margin expansion and profitability over time. Looking at growth from a sector-level, the Australian commercial services and supplies industry has been enduring some headwinds over the prior year, leading to an average earnings drop of -3.23%. This is a momentous change, given that the industry has constantly been delivering a a solid growth of 13.01% in the previous five years. This suggests that any recent headwind the industry is enduring, it’s hitting OPUS Group harder than its peers.
What does this mean?
OPUS Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research OPUS Group to get a better picture of the stock by looking at:
1. Financial Health: Is OPG’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 OPG 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 OPG 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 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.
