Analyzing Schaffer Corporation Limited’s (ASX:SFC) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess SFC’s recent performance announced on 30 June 2019 and compare these figures to its long-term trend and industry movements.
How Did SFC’s Recent Performance Stack Up Against Its Past?
SFC’s trailing twelve-month earnings (from 30 June 2019) of AU$23m has jumped 20% 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 43%, indicating the rate at which SFC is growing has slowed down. To understand what’s happening, let’s take a look at what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, Schaffer has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. However, its return on assets (ROA) of 12% is below the AU Auto Components industry of 14%, indicating Schaffer’s are utilized less efficiently. Though, its return on capital (ROC), which also accounts for Schaffer’s debt level, has increased over the past 3 years from 6.2% to 27%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 69% to 13% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Schaffer gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Schaffer to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SFC’s future growth? Take a look at our free research report of analyst consensus for SFC’s outlook.
- Financial Health: Are SFC’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 firstname.lastname@example.org. 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.