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Trifast plc (LON:TRI): Does The Earnings Decline Make It An Underperformer?

Simply Wall St

Today I will examine Trifast plc's (LON:TRI) latest earnings update (31 March 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of TRI's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.

Check out our latest analysis for Trifast

How Did TRI's Recent Performance Stack Up Against Its Past?

TRI's trailing twelve-month earnings (from 31 March 2019) of UK£12m has declined by -19% 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 14%, indicating the rate at which TRI is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and if the rest of the industry is feeling the heat.

LSE:TRI Income Statement, August 16th 2019

In terms of returns from investment, Trifast has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 6.3% is below the GB Machinery industry of 6.6%, indicating Trifast's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Trifast’s debt level, has increased over the past 3 years from 13% to 15%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Trifast to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for TRI’s future growth? Take a look at our free research report of analyst consensus for TRI’s outlook.
  2. Financial Health: Are TRI’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 31 March 2019. 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 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. Thank you for reading.