Does Sirius Real Estate Limited’s (LON:SRE) Recent Track Record Look Strong?

When Sirius Real Estate Limited’s (LSE:SRE) announced its latest earnings (30 September 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Sirius Real Estate’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not SRE actually performed well. Below is a quick commentary on how I see SRE has performed.

View our latest analysis for Sirius Real Estate

How Did SRE’s Recent Performance Stack Up Against Its Past?

SRE’s trailing twelve-month earnings (from 30 September 2019) of €128m has jumped 27% 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 29%, indicating the rate at which SRE is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is facing the same headwind.

LSE:SRE Income Statement, February 26th 2020
LSE:SRE Income Statement, February 26th 2020

In terms of returns from investment, Sirius Real Estate has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 11% exceeds the GB Real Estate industry of 5.9%, indicating Sirius Real Estate has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sirius Real Estate’s debt level, has increased over the past 3 years from 4.7% to 5.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 94% to 43% over the past 5 years.

What does this mean?

Sirius Real Estate’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Sirius Real Estate gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Sirius Real Estate to get a more holistic view of the stock by looking at:

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

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