Examining Great Canadian Gaming Corporation's (TSE:GC) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess GC's latest performance announced on 30 June 2019 and weight these figures against its longer term trend and industry movements.
Did GC's recent earnings growth beat the long-term trend and the industry?
GC's trailing twelve-month earnings (from 30 June 2019) of CA$161m has jumped 48% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 18%, indicating the rate at which GC is growing has accelerated. What's enabled this growth? Let's see if it is only attributable to industry tailwinds, or if Great Canadian Gaming has seen some company-specific growth.
In terms of returns from investment, Great Canadian Gaming has invested its equity funds well leading to a 33% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.9% exceeds the CA Hospitality industry of 5.2%, indicating Great Canadian Gaming has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Great Canadian Gaming’s debt level, has increased over the past 3 years from 15% to 16%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 126% to 89% over the past 5 years.
What does this mean?
Though Great Canadian Gaming's past data is helpful, it is only one aspect of my investment thesis. While Great Canadian Gaming has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Great Canadian Gaming to get a better picture of the stock by looking at:
- Financial Health: Are GC’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.
- Valuation: What is GC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether GC is currently mispriced by the market.
- 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 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. Thank you for reading.