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Measuring Qantas Airways Limited’s (ASX:QAN) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess QAN’s recent performance announced on 30 June 2018 and compare these figures to its historical trend and industry movements.
How QAN fared against its long-term earnings performance and its industry
QAN’s trailing twelve-month earnings (from 30 June 2018) of AU$980m has jumped 15% 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 52%, indicating the rate at which QAN 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 entire industry is experiencing the hit as well.
In terms of returns from investment, Qantas Airways has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. However, its return on assets (ROA) of 6.1% is below the AU Airlines industry of 6.1%, indicating Qantas Airways’s are utilized less efficiently. Though, its return on capital (ROC), which also accounts for Qantas Airways’s debt level, has increased over the past 3 years from 11% to 14%.
What does this mean?
Qantas Airways’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Qantas Airways to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for QAN’s future growth? Take a look at our free research report of analyst consensus for QAN’s outlook.
- Financial Health: Are QAN’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 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 email@example.com.