Today I will take a look at BMTC Group Inc’s (TSE:GBT) most recent earnings update (31 January 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the specialty retail industry performed. As an investor, I find it beneficial to assess GBT’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for BMTC Group
Could GBT beat the long-term trend and outperform its industry?
GBT’s trailing twelve-month earnings (from 31 January 2018) of CA$45.54m has increased by 3.08% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.75%, indicating the rate at which GBT is growing has accelerated. How has it been able to do this? Let’s see if it is only because of an industry uplift, or if BMTC Group has seen some company-specific growth.
In the past couple of years, BMTC Group top-line expansion has overtaken earnings and the growth rate of expenses. Though this has led to a margin contraction, it has softened BMTC Group’s earnings contraction. Eyeballing growth from a sector-level, the Canadian specialty retail industry has been growing, albeit, at a subdued single-digit rate of 5.77% in the past twelve months, and a substantial 10.35% over the past half a decade. This suggests that whatever uplift the industry is benefiting from, BMTC Group has not been able to gain as much as its industry peers.
In terms of returns from investment, BMTC Group has invested its equity funds well leading to a 22.28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13.75% exceeds the CA Specialty Retail industry of 6.52%, indicating BMTC Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for BMTC Group’s debt level, has increased over the past 3 years from 23.01% to 30.74%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be factors that are affecting the industry as a whole, hence the high industry growth rate over the same time period. I recommend you continue to research BMTC Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GBT’s future growth? Take a look at our free research report of analyst consensus for GBT’s outlook.
- Financial Health: Is GBT’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 January 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.