Assessing Ansell Limited's (ASX:ANN) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess ANN's latest performance announced on 30 June 2019 and evaluate these figures to its historical trend and industry movements.
Was ANN weak performance lately part of a long-term decline?
ANN's trailing twelve-month earnings (from 30 June 2019) of US$112m has declined by -19% 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 3.3%, indicating the rate at which ANN is growing has slowed down. What could be happening here? Let's examine what's going on with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Ansell has fallen short of achieving a 20% return on equity (ROE), recording 8.0% instead. Furthermore, its return on assets (ROA) of 5.2% is below the AU Medical Equipment industry of 10%, indicating Ansell's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Ansell’s debt level, has declined over the past 3 years from 10% to 9.9%.
What does this mean?
Ansell's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Generally companies that face a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase with the aim of keeping up with the latest industry expansion and disruption. You should continue to research Ansell to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ANN’s future growth? Take a look at our free research report of analyst consensus for ANN’s outlook.
- Financial Health: Are ANN’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 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 email@example.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.