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Assessing Monadelphous Group Limited's (ASX:MND) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess MND's recent performance announced on 31 December 2018 and evaluate these figures to its longer term trend and industry movements.
Was MND weak performance lately part of a long-term decline?
MND's trailing twelve-month earnings (from 31 December 2018) of AU$65m has declined by -3.0% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -22%, indicating the rate at which MND is growing has slowed down. Why is this? Let's examine what's transpiring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Monadelphous Group has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 9.7% exceeds the AU Construction industry of 8.3%, indicating Monadelphous Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Monadelphous Group’s debt level, has declined over the past 3 years from 30% to 21%.
What does this mean?
Though Monadelphous Group's past data is helpful, it is only one aspect of my investment thesis. Typically companies that experience a drawn out period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. I recommend you continue to research Monadelphous Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MND’s future growth? Take a look at our free research report of analyst consensus for MND’s outlook.
- Financial Health: Are MND’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 2018. 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.