When WSP Global Inc. (TSE:WSP) released its most recent earnings update (29 June 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 WSP Global 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 WSP has performed.
How WSP fared against its long-term earnings performance and its industry
WSP's trailing twelve-month earnings (from 29 June 2019) of CA$283m has jumped 29% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 21%, indicating the rate at which WSP is growing has accelerated. How has it been able to do this? Let's see whether it is merely because of an industry uplift, or if WSP Global has seen some company-specific growth.
In terms of returns from investment, WSP Global has fallen short of achieving a 20% return on equity (ROE), recording 8.7% instead. Furthermore, its return on assets (ROA) of 3.9% is below the CA Construction industry of 5.1%, indicating WSP Global's are utilized less efficiently. However, its return on capital (ROC), which also accounts for WSP Global’s debt level, has increased over the past 3 years from 7.6% to 8.2%.
What does this mean?
WSP Global's track record can be a valuable insight into its earnings performance, but it certainly 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 recommend you continue to research WSP Global to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WSP’s future growth? Take a look at our free research report of analyst consensus for WSP’s outlook.
- Financial Health: Are WSP’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 29 June 2019. 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 firstname.lastname@example.org. 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.