When BSA Limited (ASX:BSA) announced its most recent earnings (30 June 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how BSA performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see BSA has performed.
How Did BSA's Recent Performance Stack Up Against Its Past?
BSA recently turned a profit of AU$11m (most recent trailing twelve-months) compared to its average loss of -AU$5.6m over the past five years.
In terms of returns from investment, BSA has invested its equity funds well leading to a 30% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.7% exceeds the AU Commercial Services industry of 6.5%, indicating BSA has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for BSA’s debt level, has increased over the past 3 years from 28% to 36%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 92% to 4.9% over the past 5 years.
What does this mean?
Though BSA's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as BSA gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research BSA to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BSA’s future growth? Take a look at our free research report of analyst consensus for BSA’s outlook.
- Financial Health: Are BSA’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.
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