Treatt plc’s (LON:TET) EPS Grew 54.3% In A Year. Was It Better Than Long-Term Trend?
After looking at Treatt plc’s (LSE:TET) latest earnings announcement (30 September 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Treatt’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Treatt
Did TET’s recent EPS Growth beat the long-term trend and the industry?
For the purpose of this commentary, I like to use 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 analyze many different companies in a uniform manner using new information. Treatt’s most recent earnings is £9.5M, which, in comparison to last year’s figure, has escalated by a significant 55.23%. Since these values are somewhat short-term, I’ve determined an annualized five-year value for TET’s earnings, which stands at £4.6M. This means generally, Treatt has been able to consistently improve its profits over the past couple of years as well.
What’s the driver of this growth? Let’s take a look at if it is merely due to an industry uplift, or if Treatt has seen some company-specific growth. In the last few years, Treatt expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Scanning growth from a sector-level, the UK chemicals industry has been growing its average earnings by double-digit 28.53% in the previous year, and a less exciting 4.19% over the previous few years. This shows that whatever uplift the industry is profiting from, Treatt is capable of leveraging this to its advantage.
What does this mean?
Treatt’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Treatt to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for TET’s future growth? Take a look at our free research report of analyst consensus for TET’s outlook.
2. Financial Health: Is TET’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.
