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Does BCE Inc.’s (TSE:BCE) Past Performance Indicate A Weaker Future?

Assessing BCE Inc.’s (TSE:BCE) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BCE’s recent performance announced on 31 December 2018 and evaluate these figures to its longer term trend and industry movements.

Check out our latest analysis for BCE

Was BCE weak performance lately part of a long-term decline?

BCE’s trailing twelve-month earnings (from 31 December 2018) of CA$2.8b has declined by -2.8% 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 6.6%, indicating the rate at which BCE is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the entire industry is facing the same headwind.

TSX:BCE Income Statement, March 18th 2019
TSX:BCE Income Statement, March 18th 2019

In terms of returns from investment, BCE has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 6.6% exceeds the CA Telecom industry of 5.1%, indicating BCE has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for BCE’s debt level, has declined over the past 3 years from 13% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 116% to 118% over the past 5 years.

What does this mean?

Though BCE’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. You should continue to research BCE to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BCE’s future growth? Take a look at our free research report of analyst consensus for BCE’s outlook.

  2. Financial Health: Are BCE’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 31 December 2018. 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.

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