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AMA Group Limited's (ASX:AMA) Earnings Grew 44%, Did It Beat Long-Term Trend?

Simply Wall St

Understanding AMA Group Limited's (ASX:AMA) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how AMA Group is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.

See our latest analysis for AMA Group

Did AMA beat its long-term earnings growth trend and its industry?

AMA's trailing twelve-month earnings (from 30 June 2019) of AU$22m has jumped 44% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 25%, indicating the rate at which AMA is growing has accelerated. What's the driver of this growth? Let's take a look at if it is merely because of an industry uplift, or if AMA Group has experienced some company-specific growth.

ASX:AMA Income Statement, October 13th 2019

In terms of returns from investment, AMA Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 5.3% is below the AU Commercial Services industry of 7.2%, indicating AMA Group's are utilized less efficiently. However, its return on capital (ROC), which also accounts for AMA Group’s debt level, has increased over the past 3 years from 8.9% to 10%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as AMA Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research AMA Group to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for AMA’s future growth? Take a look at our free research report of analyst consensus for AMA’s outlook.
  2. Financial Health: Are AMA’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 30 June 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.