Assessing Restore plc’s (AIM:RST) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RST’s recent performance announced on 30 June 2019 and evaluate these figures to its longer term trend and industry movements.
Commentary On RST’s Past Performance
RST’s trailing twelve-month earnings (from 30 June 2019) of UK£21m has jumped 40% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 31%, indicating the rate at which RST is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is solely a result of industry tailwinds, or if Restore has experienced some company-specific growth.
In terms of returns from investment, Restore has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 5.4% exceeds the GB Commercial Services industry of 4.9%, indicating Restore has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Restore’s debt level, has declined over the past 3 years from 9.7% to 8.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 53% to 55% over the past 5 years.
What does this mean?
Restore’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 Restore gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Restore to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RST’s future growth? Take a look at our free research report of analyst consensus for RST’s outlook.
- Financial Health: Are RST’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 June 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.
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.