Where ULS Technology plc's (LON:ULS) Earnings Growth Stands Against Its Industry
Today I will examine ULS Technology plc's (AIM:ULS) latest earnings update (30 September 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of ULS'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.
See our latest analysis for ULS Technology
How Well Did ULS Perform?
ULS's trailing twelve-month earnings (from 30 September 2019) of UK£3.4m has declined by -7.2% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 16%, indicating the rate at which ULS is growing has slowed down. What could be happening here? Let's examine what's going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, ULS Technology has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 14% exceeds the GB Online Retail industry of 5.9%, indicating ULS Technology has used its assets more efficiently. However, its return on capital (ROC), which also accounts for ULS Technology’s debt level, has declined over the past 3 years from 39% to 31%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 35% to 52% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research ULS Technology to get a better picture of the stock by looking at:
Financial Health: Are ULS’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 ULS 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 ULS 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 September 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.
