Yahoo Finance Should Wizz Air Holdings Plc’s (LON:WIZZ) Recent Earnings Decline Worry You?
Examining how Wizz Air Holdings Plc (LSE:WIZZ) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Wizz Air Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its airlines industry peers. Check out our latest analysis for Wizz Air Holdings
Was WIZZ’s recent earnings decline worse than the long-term trend and the industry?
I use the ‘latest twelve-month’ data, 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 method allows me to examine many different companies on a more comparable basis, using the most relevant data points. For Wizz Air Holdings, its latest trailing-twelve-month earnings is €262.80M, which, in comparison to the prior year’s figure, has fallen by -6.48%. Given that these values may be fairly short-term thinking, I’ve estimated an annualized five-year figure for WIZZ’s earnings, which stands at €183.17M This shows that even though earnings declined against the previous year, over the long run, Wizz Air Holdings’s profits have been increasing on average.
How has it been able to do this? Let’s see if it is only owing to an industry uplift, or if Wizz Air Holdings has seen some company-specific growth. Over the last couple of years, Wizz Air Holdings increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the UK airlines industry has been growing its average earnings by double-digit 10.42% in the prior year, and 26.78% over the past five years. This shows that whatever tailwind the industry is profiting from, Wizz Air Holdings has not been able to reap as much as its industry peers.
What does this mean?
Wizz Air Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I recommend you continue to research Wizz Air Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for WIZZ’s future growth? Take a look at our free research report of analyst consensus for WIZZ’s outlook.
Financial Health: Is WIZZ’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.
