Examining Fisher & Paykel Healthcare Corporation Limited’s (NZSE:FPH) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess FPH’s latest performance announced on 31 March 2018 and weigh these figures against its longer term trend and industry movements.
Were FPH’s earnings stronger than its past performances and the industry?
FPH’s trailing twelve-month earnings (from 31 March 2018) of NZ$190m has jumped 12% 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 18%, indicating the rate at which FPH is growing has slowed down. To understand what’s happening, let’s look at what’s occurring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Fisher & Paykel Healthcare has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the NZ Medical Equipment industry of 7.4%, indicating Fisher & Paykel Healthcare has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Fisher & Paykel Healthcare’s debt level, has increased over the past 3 years from 31% to 32%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 38% to 11% over the past 5 years.
What does this mean?
Though Fisher & Paykel Healthcare’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Fisher & Paykel Healthcare gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Fisher & Paykel Healthcare to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FPH’s future growth? Take a look at our free research report of analyst consensus for FPH’s outlook.
- Financial Health: Are FPH’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.