Want To Invest In Stagecoach Group plc (LON:SGC)? Here’s How It Performed Lately
Examining Stagecoach Group plc’s (LSE:SGC) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess SGC’s latest performance announced on 28 October 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Stagecoach Group
Was SGC’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I use data from the most recent 12 months, 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 technique enables me to assess different companies on a similar basis, using new information. For Stagecoach Group, its most recent earnings (trailing twelve month) is UK£36.90M, which, against the prior year’s figure, has taken a dive by a significant -62.27%. Given that these values are relatively short-term thinking, I’ve created an annualized five-year value for SGC’s net income, which stands at UK£125.65M This doesn’t look much better, as earnings seem to have gradually been deteriorating over time.
Why is this? Well, let’s look at what’s occurring with margins and whether the rest of the industry is facing the same headwind. Revenue growth in the last couple of years, has been positive, nevertheless earnings growth has been deteriorating. This suggest that Stagecoach Group has been growing expenses, which is hurting margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the UK transportation industry has been relatively flat in terms of earnings growth over the last couple of years. This shows that any headwind the industry is facing, it’s hitting Stagecoach Group harder than its peers.
What does this mean?
Though Stagecoach Group’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that experience a drawn out period of diminishing earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a sign of a structural change, which makes Stagecoach Group and its peers a higher risk investment. You should continue to research Stagecoach Group to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SGC’s future growth? Take a look at our free research report of analyst consensus for SGC’s outlook.
2. Financial Health: Is SGC’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 28 October 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.
