Where Ruralco Holdings Limited (ASX:RHL) Stands In Terms Of Earnings Growth Against Its Industry
Today I will examine Ruralco Holdings Limited’s (ASX:RHL) latest earnings update (30 September 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of RHL’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
View our latest analysis for Ruralco Holdings
How Well Did RHL Perform?
RHL’s trailing twelve-month earnings (from 30 September 2018) of AU$25m 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 24%, indicating the rate at which RHL is growing has slowed down. Why could this be happening? Well, let’s examine what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Ruralco Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 3.2% is below the AU Retail Distributors industry of 4.3%, indicating Ruralco Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Ruralco Holdings’s debt level, has declined over the past 3 years from 16% to 12%.
What does this mean?
While past data is useful, it 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 Ruralco Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for RHL’s future growth? Take a look at our free research report of analyst consensus for RHL’s outlook.
Financial Health: Are RHL’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 September 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 editorial-team@simplywallst.com.
