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When Synthomer plc (LON:SYNT) released its most recent earnings update (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Synthomer has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see SYNT has performed.
How Did SYNT's Recent Performance Stack Up Against Its Past?
SYNT's trailing twelve-month earnings (from 31 December 2018) of UK£100m has jumped 35% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 18%, indicating the rate at which SYNT is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is merely a result of an industry uplift, or if Synthomer has experienced some company-specific growth.
In terms of returns from investment, Synthomer has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.1% exceeds the GB Chemicals industry of 6.0%, indicating Synthomer has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Synthomer’s debt level, has declined over the past 3 years from 19% to 15%.
What does this mean?
Synthomer's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Synthomer gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Synthomer to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SYNT’s future growth? Take a look at our free research report of analyst consensus for SYNT’s outlook.
- Financial Health: Are SYNT’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 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Thank you for reading.