Yahoo Finance Has Entertainment One Ltd (LON:ETO) Improved Earnings In Recent Times?
Examining Entertainment One Ltd’s (LON:ETO) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess ETO’s latest performance announced on 31 March 2018 and compare these figures to its longer term trend and industry movements.
View our latest analysis for Entertainment One
Could ETO beat the long-term trend and outperform its industry?
ETO’s trailing twelve-month earnings (from 31 March 2018) of UK£64.5m has more than doubled from UK£11.7m in the prior year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19.7%, indicating the rate at which ETO is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is solely owing to industry tailwinds, or if Entertainment One has seen some company-specific growth.
In the last few years, Entertainment One grew its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time.
Eyeballing growth from a sector-level, the UK media industry has been growing its average earnings by double-digit 17.3% in the previous year, and 10.1% over the past five years. This growth is a median of profitable companies of 25 Media companies in GB including Aeorema Communications, FFI Holdings and System1 Group. This means that any uplift the industry is gaining from, Entertainment One is capable of amplifying this to its advantage.
In terms of returns from investment, Entertainment One has fallen short of achieving a 20% return on equity (ROE), recording 11.1% instead. However, its return on assets (ROA) of 5.1% exceeds the GB Media industry of 4.7%, indicating Entertainment One has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Entertainment One’s debt level, has increased over the past 3 years from 6.6% to 6.9%.
What does this mean?
While past data is useful, it 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 Entertainment One to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ETO’s future growth? Take a look at our free research report of analyst consensus for ETO’s outlook.
Financial Health: Are ETO’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
