Does TT Electronics plc's (LON:TTG) Recent Track Record Look Strong?
When TT Electronics plc (LSE:TTG) released its most recent earnings update (31 December 2019), 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 TT Electronics 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 TTG has performed.
Check out our latest analysis for TT Electronics
Commentary On TTG's Past Performance
TTG's trailing twelve-month earnings (from 31 December 2019) of UK£14m has increased by 6.9% 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 35%, indicating the rate at which TTG is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, TT Electronics has fallen short of achieving a 20% return on equity (ROE), recording 5.2% instead. Furthermore, its return on assets (ROA) of 3.5% is below the GB Electronic industry of 6.9%, indicating TT Electronics's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for TT Electronics’s debt level, has declined over the past 3 years from 5.1% to 4.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 28% to 42% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research TT Electronics to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for TTG’s future growth? Take a look at our free research report of analyst consensus for TTG’s outlook.
Financial Health: Are TTG’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 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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