Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess FFI Holdings Limited's (ASX:FFI) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
How Did FFI's Recent Performance Stack Up Against Its Past?
FFI's trailing twelve-month earnings (from 30 June 2019) of AU$3.3m has jumped 42% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.5%, indicating the rate at which FFI is growing has accelerated. What's the driver of this growth? Let's see whether it is solely a result of an industry uplift, or if FFI Holdings has seen some company-specific growth.
In terms of returns from investment, FFI Holdings has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. However, its return on assets (ROA) of 6.9% exceeds the AU Food industry of 5.1%, indicating FFI Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for FFI Holdings’s debt level, has increased over the past 3 years from 7.4% to 10%.
What does this mean?
FFI Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While FFI Holdings has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research FFI Holdings to get a better picture of the stock by looking at:
- Financial Health: Are FFI’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.
- Valuation: What is FFI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FFI is currently mispriced by the market.
- 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.
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.
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