Yahoo Finance With 25.84% Earnings Growth, Did Persimmon Plc (LON:PSN) Outperform The Industry?
Investors with a long-term horizong may find it valuable to assess Persimmon Plc’s (LSE:PSN) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Persimmon is currently performing. View our latest analysis for Persimmon
Did PSN beat its long-term earnings growth trend and its industry?
I like to 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 method allows me to analyze different stocks in a uniform manner using new information. For Persimmon, its latest trailing-twelve-month earnings is UK£786.90M, which, relative to last year’s level, has climbed up by 25.84%. Given that these values may be relatively nearsighted, I have computed an annualized five-year figure for PSN’s net income, which stands at UK£376.24M This means generally, Persimmon has been able to gradually improve its earnings over the last couple of years as well.
How has it been able to do this? Well, let’s take a look at if it is only owing to an industry uplift, or if Persimmon has seen some company-specific growth. Over the last few years, Persimmon grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Inspecting growth from a sector-level, the UK consumer durables industry has been growing its average earnings by double-digit 17.09% in the past twelve months, and 24.04% over the last five years. This shows that any tailwind the industry is gaining from, Persimmon is capable of leveraging this to its advantage.
What does this mean?
Persimmon’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Persimmon gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Persimmon to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PSN’s future growth? Take a look at our free research report of analyst consensus for PSN’s outlook.
Financial Health: Is PSN’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.
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 31 December 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.
