Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Fisher & Paykel Healthcare Corporation Limited's (NZSE:FPH) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
How FPH fared against its long-term earnings performance and its industry
FPH's trailing twelve-month earnings (from 30 September 2019) of NZ$233m has jumped 13% 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 15%, indicating the rate at which FPH is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Fisher & Paykel Healthcare has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the NZ Medical Equipment industry of 10%, indicating Fisher & Paykel Healthcare has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Fisher & Paykel Healthcare’s debt level, has declined over the past 3 years from 34% to 30%.
What does this mean?
Fisher & Paykel Healthcare's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Fisher & Paykel Healthcare 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 Fisher & Paykel Healthcare to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FPH’s future growth? Take a look at our free research report of analyst consensus for FPH’s outlook.
- Financial Health: Are FPH’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 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 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.
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