Examining Green Cross Health Limited’s (NZSE:GXH) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess GXH’s latest performance announced on 31 March 2019 and weigh these figures against its longer term trend and industry movements.
Check out our latest analysis for Green Cross Health
Did GXH’s recent earnings growth beat the long-term trend and the industry?
GXH’s trailing twelve-month earnings (from 31 March 2019) of NZ$16m has increased by 3.2% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.5%, indicating the rate at which GXH is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is only owing to industry tailwinds, or if Green Cross Health has seen some company-specific growth.
In terms of returns from investment, Green Cross Health has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 6.8% exceeds the NZ Consumer Retailing industry of 5.0%, indicating Green Cross Health has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Green Cross Health’s debt level, has declined over the past 3 years from 19% to 18%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 10% to 37% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Green Cross Health has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Green Cross Health to get a better picture of the stock by looking at:
- Financial Health: Are GXH’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 GXH 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 GXH 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 31 March 2019. This may not be consistent with full year annual report figures.
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.
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. Thank you for reading.