U.S. Markets closed

Where Lb-shell plc (LON:LBP) Stands In Earnings Growth Against Its Industry

Alvin Rowe

Examining Lb-shell plc’s (LSE:LBP) 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 LBP’s latest performance announced on 31 March 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Lb-shell

Commentary On LBP’s Past Performance

For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine various companies on a more comparable basis, using new information. For Lb-shell, its most recent bottom-line (trailing twelve month) is -UK£27.30M, which, in comparison to last year’s figure, has become less negative. Since these values may be somewhat short-term thinking, I have estimated an annualized five-year value for Lb-shell’s net income, which stands at -UK£45.17M. This shows that, although net income is negative, it has become less negative over the years.

LSE:LBP Income Statement Mar 12th 18

We can further analyze Lb-shell’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Lb-shell’s top-line has increased by 33.81% on average, implying that the company is in a high-growth period with expenses shooting ahead of revenues, leading to annual losses. Eyeballing growth from a sector-level, the UK electrical industry has been growing its average earnings by double-digit 29.22% over the previous twelve months, and a less exciting 7.83% over the last five years. This shows that, even though Lb-shell is currently loss-making, it may have been aided by industry tailwinds, moving earnings towards to right direction.

What does this mean?

Lb-shell’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Lb-shell may be facing and whether management guidance has regularly been met in the past. You should continue to research Lb-shell to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

  • 1. Financial Health: Is LBP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
  • 2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 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.