Understanding how EBOS Group Limited (NZSE:EBO) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how EBOS Group is doing by comparing its latest earnings with its long-term trend as well as the performance of its healthcare industry peers.
Did EBO's recent earnings growth beat the long-term trend and the industry?
EBO's trailing twelve-month earnings (from 30 June 2019) of AU$138m has increased by 0.3% 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 9.7%, indicating the rate at which EBO is growing has slowed down. To understand what's happening, let's examine what's transpiring with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, EBOS Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 5.1% exceeds the NZ Healthcare industry of 4.3%, indicating EBOS Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for EBOS Group’s debt level, has declined over the past 3 years from 14% to 13%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 42% to 44% over the past 5 years.
What does this mean?
EBOS Group'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 EBOS Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research EBOS Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EBO’s future growth? Take a look at our free research report of analyst consensus for EBO’s outlook.
- Financial Health: Are EBO’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.
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.
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