Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Aurizon Holdings Limited's (ASX:AZJ) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Was AZJ weak performance lately part of a long-term decline?
AZJ's trailing twelve-month earnings (from 30 June 2019) of AU$473m has declined by -15% 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 3.3%, indicating the rate at which AZJ is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Aurizon Holdings has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 6.4% exceeds the AU Transportation industry of 5.8%, indicating Aurizon Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Aurizon Holdings’s debt level, has increased over the past 3 years from 8.7% to 10%.
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 affecting its business. I recommend you continue to research Aurizon Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AZJ’s future growth? Take a look at our free research report of analyst consensus for AZJ’s outlook.
- Financial Health: Are AZJ’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 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 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. Thank you for reading.