Robert Walters PLC (LON:RWA): Has Recent Earnings Growth Beaten Long-Term Trend?
After looking at Robert Walters PLC’s (LSE:RWA) latest earnings announcement (30 June 2017), 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 Robert Walters
Were RWA’s earnings stronger than its past performances and the industry?
I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to assess different companies on a more comparable basis, using the most relevant data points. “For Robert Walters, its “, latest twelve-month earnings is £23.2M, which, relative to the prior year’s level, has moved up by 36.02%. Given that these figures are fairly nearsighted, I’ve created an annualized five-year value for Robert Walters’s net income, which stands at £11.2M. This means that, on average, Robert Walters has been able to consistently grow its bottom line over the last few years as well.
How has it been able to do this? Let’s take a look at if it is solely a result of industry tailwinds, or if Robert Walters has seen some company-specific growth. Over the last few years, Robert Walters grew 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 UK professional services industry has been growing, albeit, at a subdued single-digit rate of 3.53% over the prior twelve months, and 8.02% over the previous few years. This suggests that whatever recent headwind the industry is experiencing, Robert Walters 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 Robert Walters gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Robert Walters to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for RWA’s future growth? Take a look at our free research report of analyst consensus for RWA’s outlook.
2. Financial Health: Is RWA’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.
