Examining how Auckland International Airport Limited (NZSE:AIA) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Auckland International Airport is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its infrastructure industry peers.
How Did AIA's Recent Performance Stack Up Against Its Past?
AIA's trailing twelve-month earnings (from 30 June 2019) of NZ$524m 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 25%, indicating the rate at which AIA is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Auckland International Airport has fallen short of achieving a 20% return on equity (ROE), recording 8.7% instead. However, its return on assets (ROA) of 6.9% exceeds the NZ Infrastructure industry of 6.8%, indicating Auckland International Airport has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Auckland International Airport’s debt level, has declined over the past 3 years from 6.3% to 5.5%.
What does this mean?
Auckland International Airport's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I recommend you continue to research Auckland International Airport to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AIA’s future growth? Take a look at our free research report of analyst consensus for AIA’s outlook.
- Financial Health: Are AIA’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.