Advertisement
U.S. markets open in 4 hours 14 minutes
  • S&P Futures

    5,306.25
    -2.00 (-0.04%)
     
  • Dow Futures

    40,150.00
    +6.00 (+0.01%)
     
  • Nasdaq Futures

    18,490.75
    -13.00 (-0.07%)
     
  • Russell 2000 Futures

    2,134.80
    -3.60 (-0.17%)
     
  • Crude Oil

    81.71
    +0.36 (+0.44%)
     
  • Gold

    2,213.20
    +0.50 (+0.02%)
     
  • Silver

    24.51
    -0.24 (-0.96%)
     
  • EUR/USD

    1.0783
    -0.0047 (-0.43%)
     
  • 10-Yr Bond

    4.1960
    0.0000 (0.00%)
     
  • Vix

    12.97
    +0.19 (+1.49%)
     
  • GBP/USD

    1.2591
    -0.0047 (-0.37%)
     
  • USD/JPY

    151.4680
    +0.2220 (+0.15%)
     
  • Bitcoin USD

    70,746.27
    +1,071.28 (+1.54%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,953.55
    +21.57 (+0.27%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

With A -16% Earnings Drop, Did Premier Investments Limited (ASX:PMV) Really Underperform?

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Premier Investments Limited's (ASX:PMV) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.

View our latest analysis for Premier Investments

How Did PMV's Recent Performance Stack Up Against Its Past?

PMV's trailing twelve-month earnings (from 26 January 2019) of AU$94m has declined by -16% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -2.7%, indicating the rate at which PMV is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the entire industry is experiencing the hit as well.

ASX:PMV Income Statement, May 4th 2019
ASX:PMV Income Statement, May 4th 2019

In terms of returns from investment, Premier Investments has fallen short of achieving a 20% return on equity (ROE), recording 6.8% instead. Furthermore, its return on assets (ROA) of 5.7% is below the AU Specialty Retail industry of 6.7%, indicating Premier Investments's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Premier Investments’s debt level, has increased over the past 3 years from 8.6% to 9.9%.

What does this mean?

Premier Investments's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Usually companies that endure a drawn out period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry growth and disruption. I recommend you continue to research Premier Investments to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for PMV’s future growth? Take a look at our free research report of analyst consensus for PMV’s outlook.

  2. Financial Health: Are PMV’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.

  3. 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 26 January 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

Advertisement