Stewart & Wight Plc :STE-GB: Earnings Analysis: For the six months ended March 31, 2016 : June 13, 2016

Stewart & Wight Plc reports financial results for the half-year ended March 31, 2016.

We analyze the earnings along side the following peers of Stewart & Wight Plc – Helical Bar plc (HLCL-GB) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of GBP 0.48 million, Net Earnings of GBP 1.06 million.
  • Gross margins widened from 83.25% to 84.61% compared to the same period last year, operating (EBITDA) margins now 71.61% from 74.61%.
  • Year-on-year change in operating cash flow of 40.93% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2014-03-31 2014-09-30 2015-03-31 2015-09-30 2016-03-31
Relevant Numbers (Semi-Annual)
Revenues 0.42 0.46 0.49 0.42 0.48
Revenue Growth (YOY) -28.29 -20.87 14.29 -7.8 -1
Earnings -0.12 0.27 0.5 0.52 1.06
Earnings Growth (YOY) 64.65 1015.81 537.31 92.25 110.67
Net Margin -27.12 59.45 103.78 123.97 220.84
EPS N/A N/A N/A 0.33 0.68
Return on Equity -2.37 5.64 10.24 10.27 19.69
Return on Assets -2.04 5.41 9.89 9.48 17.45

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Market Share Versus Profits

Revenues History
Earnings History

STE-GB‘s change in revenue this period compared to the same period last year of -1.00% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that STE-GB is holding onto its market share. Also, for comparison purposes, revenues changed by 14.09% and earnings by 103.25% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 83.25% to 84.61%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

Operating Cash Flow Growth Versus Earnings Growth

STE-GB‘s change in operating cash flow of 40.93% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s operating (EBIT) margins contracted from 74.61% to 71.61%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from 120.98% to 235.35%.

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Stewart & Wight Plc

Company Profile

Stewart & Wight Plc engages in the activity of property investment. Its principal business consists of the acquisition and management of investment properties, majority of which are let on full repairing and insuring leases. The company was founded in 1898 and is headquartered in London, the United Kingdom.

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