Examining BBA Aviation plc’s (LON:BBA) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess BBA’s latest performance announced on 31 December 2018 and weigh these figures against its longer term trend and industry movements.
Was BBA’s weak performance lately a part of a long-term decline?
BBA’s trailing twelve-month earnings (from 31 December 2018) of US$118m has declined by -17% 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 -4.8%, indicating the rate at which BBA is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, BBA Aviation has fallen short of achieving a 20% return on equity (ROE), recording 6.1% instead. Furthermore, its return on assets (ROA) of 4.3% is below the GB Infrastructure industry of 5.9%, indicating BBA Aviation’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for BBA Aviation’s debt level, has increased over the past 3 years from 5.7% to 6.8%.
What does this mean?
Though BBA Aviation’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research BBA Aviation to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BBA’s future growth? Take a look at our free research report of analyst consensus for BBA’s outlook.
- Financial Health: Are BBA’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 31 December 2018. This may not be consistent with full year annual report figures.
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