How Does Howden Joinery Group Plc’s (LON:HWDN) Earnings Growth Stack Up Against The Industry?
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Howden Joinery Group Plc (LON:HWDN) useful as an attempt to give more color around how Howden Joinery Group is currently performing.
See our latest analysis for Howden Joinery Group
How Did HWDN’s Recent Performance Stack Up Against Its Past?
HWDN’s trailing twelve-month earnings (from 16 June 2018) of UK£187m has increased by 4.1% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which HWDN is growing has slowed down. Why could this be happening? Well, let’s examine what’s going on with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Howden Joinery Group has invested its equity funds well leading to a 39% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the GB Trade Distributors industry of 7.9%, indicating Howden Joinery Group has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Howden Joinery Group’s debt level, has declined over the past 3 years from 45% to 44%.
What does this mean?
Though Howden Joinery Group’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? I recommend you continue to research Howden Joinery Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for HWDN’s future growth? Take a look at our free research report of analyst consensus for HWDN’s outlook.
Financial Health: Are HWDN’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 16 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
