U.S. Markets open in 5 hrs 51 mins

How Has SKYCITY Entertainment Group Limited's (NZSE:SKC) Performed Against The Industry?

Simply Wall St

When SKYCITY Entertainment Group Limited (NZSE:SKC) announced its most recent earnings (30 June 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how SKYCITY Entertainment Group performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see SKC has performed.

See our latest analysis for SKYCITY Entertainment Group

Commentary On SKC's Past Performance

SKC's trailing twelve-month earnings (from 30 June 2019) of NZ$161m has increased by 1.3% 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 4.5%, indicating the rate at which SKC is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the entire industry is experiencing the hit as well.

NZSE:SKC Income Statement, December 4th 2019

In terms of returns from investment, SKYCITY Entertainment Group has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 6.7% exceeds the NZ Hospitality industry of 5.9%, indicating SKYCITY Entertainment Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for SKYCITY Entertainment Group’s debt level, has declined over the past 3 years from 11% to 9.0%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as SKYCITY Entertainment Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research SKYCITY Entertainment Group to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for SKC’s future growth? Take a look at our free research report of analyst consensus for SKC’s outlook.
  2. Financial Health: Are SKC’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.
  3. 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 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 editorial-team@simplywallst.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.

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. Thank you for reading.