When Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH) released its most recent earnings update (30 September 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Fisher & Paykel Healthcare’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not FPH actually performed well. Below is a quick commentary on how I see FPH has performed.
How Well Did FPH Perform?
FPH’s trailing twelve-month earnings (from 30 September 2019) of NZ$233m has jumped 13% 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 15%, indicating the rate at which FPH is growing has slowed down. To understand what’s happening, let’s take a look at what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Fisher & Paykel Healthcare has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the NZ Medical Equipment industry of 8.6%, indicating Fisher & Paykel Healthcare has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Fisher & Paykel Healthcare’s debt level, has declined over the past 3 years from 34% to 30%.
What does this mean?
Though Fisher & Paykel Healthcare’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Fisher & Paykel Healthcare gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Fisher & Paykel Healthcare to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FPH’s future growth? Take a look at our free research report of analyst consensus for FPH’s outlook.
- Financial Health: Are FPH’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 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 email@example.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.
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