Understanding Event Hospitality & Entertainment Limited's (ASX:EVT) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Event Hospitality & Entertainment is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Could EVT beat the long-term trend and outperform its industry?
EVT's trailing twelve-month earnings (from 30 June 2019) of AU$107m has increased by 5.5% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.3%, indicating the rate at which EVT is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is only a result of industry tailwinds, or if Event Hospitality & Entertainment has experienced some company-specific growth.
In terms of returns from investment, Event Hospitality & Entertainment has fallen short of achieving a 20% return on equity (ROE), recording 9.5% instead. However, its return on assets (ROA) of 6.5% exceeds the AU Entertainment industry of 6.2%, indicating Event Hospitality & Entertainment has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Event Hospitality & Entertainment’s debt level, has declined over the past 3 years from 15% to 9.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 12% to 33% over the past 5 years.
What does this mean?
Though Event Hospitality & Entertainment's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Event Hospitality & Entertainment gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Event Hospitality & Entertainment to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EVT’s future growth? Take a look at our free research report of analyst consensus for EVT’s outlook.
- Financial Health: Are EVT’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 firstname.lastname@example.org. 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.