STV Group plc (LON:STVG): Should The Recent Earnings Drop Worry You?
Assessing STV Group plc’s (LSE:STVG) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how STV Group is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its media industry peers. Check out our latest analysis for STV Group
How Did STVG’s Recent Performance Stack Up Against Its Past?
I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess various companies in a uniform manner using the most relevant data points. For STV Group, its most recent trailing-twelve-month earnings is £10.7M, which, in comparison to the prior year’s figure, has plunged by -25.69%. Since these figures are relatively nearsighted, I’ve calculated an annualized five-year value for STV Group’s earnings, which stands at £9.2M. This shows that despite the fact that earnings declined against last year, in the long run, STV Group’s profits have been growing on average.
What’s enabled this growth? Well, let’s take a look at whether it is only a result of industry tailwinds, or if STV Group has seen some company-specific growth. In the past couple of years, STV Group increased its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Inspecting growth from a sector-level, the UK media industry has been enduring some headwinds over the prior year, leading to an average earnings drop of -6.09%. This is a momentous change, given that the industry has been delivering a positive rate of 7.65%, on average, over the past couple of years. This means that any near-term headwind the industry is enduring, it’s hitting STV Group harder than its peers.
What does this mean?
STV 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 capricious earnings, can have many factors affecting its business. I recommend you continue to research STV Group to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for STVG’s future growth? Take a look at our free research report of analyst consensus for STVG’s outlook.
2. Financial Health: Is STVG’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 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.
