Measuring Treasury Wine Estates Limited’s (ASX:TWE) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess TWE’s recent performance announced on 30 June 2018 and compare these figures to its historical trend and industry movements.
How Did TWE’s Recent Performance Stack Up Against Its Past?
TWE’s trailing twelve-month earnings (from 30 June 2018) of AU$360m has jumped 34% 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 50%, indicating the rate at which TWE is growing has slowed down. To understand what’s happening, let’s look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Treasury Wine Estates has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 7.2% exceeds the AU Beverage industry of 5.9%, indicating Treasury Wine Estates has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Treasury Wine Estates’s debt level, has increased over the past 3 years from 4.4% to 11%.
What does this mean?
Treasury Wine Estates’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 Treasury Wine Estates gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Treasury Wine Estates to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TWE’s future growth? Take a look at our free research report of analyst consensus for TWE’s outlook.
- Financial Health: Are TWE’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 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.