One good quarter or half year in business doesn’t make a trend, that’s why investors have to look into the past three, five or even 10 years to compare results. With the worst of the GFC now behind us, and what seems to be a new business cycle starting, I looked for companies that beat their three-year earnings per share growth trend. I want good growth, yet I want it to be above average to see that trend grow even more.
Crown Resorts Limited (ASX: CWN) has set a lot of business opportunities in motion with a new casino resort opening in The Philippines, operating through its joint venture Melco Crown. A planned second gaming venue in a six-star hotel to be erected at Darling Harbour, and possible entry into the QLD gambling market in the mid-term.
It more than doubled its half-year net profit to member equity holders to $382 million from $180.8 million in the pcp. Its underlying net profit of $315 million was a little lighter than the $328 million analysts expected, but the 29.4% increase from the H1 2013 is still attractive.
There is a possibility it will get a dividend payout from Melco Crown. If it does, then Crown’s share is estimated to be about $71.2 million.
Fletcher Building Limited (ASX: FBU), the building materials producer, has benefitted from a housing recovery, and also assisted in the rebuilding of Christchurch after the earthquake devastation. Over the past three years the reported adjusted EPS growth trend was an average annual 4.5%, but in H1 2014, adjusted EPS grew by almost 25%.
Since mid-2012, its share price has doubled to $9, but with the housing market still not in full swing nationwide, there is more potential growth in earnings.
Platinum Asset Management Limited (ASX: PTM) grew its total funds under management over the first half of FY2014 from $19.7 billion to $23.2 billion, which did wonders for earnings. Its interim net profit shot up 68% to $105 million.
It had a three-year interim EPS growth trend of about 10%, but the half-year in H1 2014 has achieved EPS growth of 61%, and that’s good in any book. The fund manager hit a high of $7.56 a share this week.
Sometimes we can locate points where the earnings trends are beginning to inflect upwards after a period of downward or flat movement. When the average trend and the most recent result vary greatly, you want to take notice of those companies.