For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine George Weston Limited’s (TSE:WN) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. See our latest analysis for George Weston
Were WN’s earnings stronger than its past performances and the industry?
WN’s trailing twelve-month earnings (from 24 March 2018) of CA$787.00m has jumped 36.60% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.73%, indicating the rate at which WN is growing has accelerated. How has it been able to do this? Let’s see whether it is merely due to industry tailwinds, or if George Weston has experienced some company-specific growth.
The ascend in earnings seems to be driven by a substantial top-line increase outpacing its growth rate of expenses. Though this brought about a margin contraction, it has made George Weston more profitable. Looking at growth from a sector-level, the Canadian consumer retailing industry has been growing its average earnings by double-digit 35.21% in the prior year, and a more subdued 3.73% over the past five. This shows that whatever tailwind the industry is benefiting from, George Weston is able to leverage this to its advantage.
In terms of returns from investment, George Weston has not invested its equity funds well, leading to a 11.85% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.54% is below the CA Consumer Retailing industry of 7.75%, indicating George Weston’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for George Weston’s debt level, has increased over the past 3 years from 3.61% to 7.63%.
What does this mean?
Though George Weston’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research George Weston to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WN’s future growth? Take a look at our free research report of analyst consensus for WN’s outlook.
- Financial Health: Is WN’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 24 March 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.