For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine PWR Holdings Limited’s (ASX:PWH) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
See our latest analysis for PWR Holdings
How PWH fared against its long-term earnings performance and its industry
PWH’s trailing twelve-month earnings (from 30 June 2019) of AU$14m has jumped 29% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 15%, indicating the rate at which PWH is growing has accelerated. How has it been able to do this? Let’s see if it is only owing to industry tailwinds, or if PWR Holdings has seen some company-specific growth.
In terms of returns from investment, PWR Holdings has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the AU Auto Components industry of 14%, indicating PWR Holdings has used its assets more efficiently. However, its return on capital (ROC), which also accounts for PWR Holdings’s debt level, has declined over the past 3 years from 42% to 34%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.9% to 6.4% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research PWR Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PWH’s future growth? Take a look at our free research report of analyst consensus for PWH’s outlook.
- Financial Health: Are PWH’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.
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.