U.S. Markets closed

Where Accent Group Limited (ASX:AX1) Stands In Terms Of Earnings Growth Against Its Industry

Simply Wall St

Examining how Accent Group Limited (ASX:AX1) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Accent Group is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its specialty retail industry peers.

Check out our latest analysis for Accent Group

How AX1 fared against its long-term earnings performance and its industry

AX1's trailing twelve-month earnings (from 30 June 2019) of AU$54m has jumped 23% 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 30%, indicating the rate at which AX1 is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and whether the whole industry is feeling the heat.

ASX:AX1 Income Statement, January 25th 2020

In terms of returns from investment, Accent Group has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 8.6% exceeds the AU Specialty Retail industry of 8.2%, indicating Accent Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Accent Group’s debt level, has increased over the past 3 years from 13% to 16%.

What does this mean?

Accent Group'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? I suggest you continue to research Accent Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for AX1’s future growth? Take a look at our free research report of analyst consensus for AX1’s outlook.
  2. Financial Health: Are AX1’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.
  3. 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 editorial-team@simplywallst.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.

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. Thank you for reading.