When SIA Engineering Company Limited’s (SGX:S59) announced its latest earnings (30 September 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were SIA Engineering’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not S59 actually performed well. Below is a quick commentary on how I see S59 has performed.
How Well Did S59 Perform?
S59’s trailing twelve-month earnings (from 30 September 2018) of S$187m has increased by 7.8% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -3.8%, indicating the rate at which S59 is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is solely because of an industry uplift, or if SIA Engineering has seen some company-specific growth.
In terms of returns from investment, SIA Engineering has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 10% exceeds the SG Infrastructure industry of 5.5%, indicating SIA Engineering has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for SIA Engineering’s debt level, has declined over the past 3 years from 6.9% to 4.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.9% to 1.4% over the past 5 years.
What does this mean?
SIA Engineering’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be variables that are impacting the entire industry thus the high industry growth rate over the same time frame. I recommend you continue to research SIA Engineering to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for S59’s future growth? Take a look at our free research report of analyst consensus for S59’s outlook.
- Financial Health: Are S59’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 September 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 email@example.com.