Does JD Sports Fashion plc’s (LON:JD.) Recent Track Record Look Strong?
Assessing JD Sports Fashion plc’s (LON:JD.) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess JD.’s latest performance announced on 04 August 2018 and evaluate these figures to its historical trend and industry movements.
Check out our latest analysis for JD Sports Fashion
Did JD.’s recent earnings growth beat the long-term trend and the industry?
JD.’s trailing twelve-month earnings (from 04 August 2018) of UK£251m has jumped 25% 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 34%, indicating the rate at which JD. is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, JD Sports Fashion has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the GB Specialty Retail industry of 5.3%, indicating JD Sports Fashion has used its assets more efficiently. However, its return on capital (ROC), which also accounts for JD Sports Fashion’s debt level, has declined over the past 3 years from 33% to 27%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 11% to 36% over the past 5 years.
What does this mean?
Though JD Sports Fashion’s past data is helpful, it is only one aspect of my investment thesis. While JD Sports Fashion has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research JD Sports Fashion to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for JD.’s future growth? Take a look at our free research report of analyst consensus for JD.’s outlook.
Financial Health: Are JD.’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 04 August 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.
