Has Taiga Building Products Ltd (TSX:TBL) Improved Earnings Growth In Recent Times?
After reading Taiga Building Products Ltd’s (TSX:TBL) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past 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 a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for TBL
Commentary On TBL’s Past Performance
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 blend enables me to assess many different companies on a similar basis, using new information. For Taiga Building Products, the most recent twelve-month earnings is CA$11M, which, relative to last year’s figure, has increased by 29.60%. Given that these figures are fairly myopic, I’ve computed an annualized five-year figure for Taiga Building Products’s net income, which stands at CA$8M. This means on average, Taiga Building Products has been able to increasingly grow its earnings over the last few years as well.
How has it been able to do this? Let’s see if it is solely because of industry tailwinds, or if Taiga Building Products has experienced some company-specific growth. Over the past couple of years, Taiga Building Products expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the Canadian trading companies and distributors industry has been growing, albeit, at a unexciting single-digit rate of 9.99% in the previous year, . This is a turnaround from a volatile drop of -7.28% in the past few years. This means in the recent industry expansion, Taiga Building Products is able to amplify this to its advantage.
What does this mean?
Though Taiga Building Products’s past data is helpful, it is only one aspect of my investment thesis. While Taiga Building Products has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Taiga Building Products to get a more holistic view of the stock by looking at:
1. Financial Health: Is TBL’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 TBL 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 TBL 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.
