For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Super Retail Group Limited's (ASX:SUL) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Could SUL beat the long-term trend and outperform its industry?
SUL's trailing twelve-month earnings (from 29 June 2019) of AU$139m has increased by 8.7% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.2%, indicating the rate at which SUL is growing has accelerated. What's enabled this growth? Let's see if it is merely owing to an industry uplift, or if Super Retail Group has seen some company-specific growth.
In terms of returns from investment, Super Retail Group has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 9.0% exceeds the AU Specialty Retail industry of 8.2%, indicating Super Retail Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Super Retail Group’s debt level, has increased over the past 3 years from 10% to 16%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 53% to 48% over the past 5 years.
What does this mean?
Though Super Retail Group's past data is helpful, it is only one aspect of my investment thesis. While Super Retail Group 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 Super Retail Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SUL’s future growth? Take a look at our free research report of analyst consensus for SUL’s outlook.
- Financial Health: Are SUL’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.
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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