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Examining GUD Holdings Limited’s (ASX:GUD) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess GUD’s latest performance announced on 31 December 2018 and weight these figures against its longer term trend and industry movements.
Could GUD beat the long-term trend and outperform its industry?
GUD’s trailing twelve-month earnings (from 31 December 2018) of AU$54m has increased by 9.6% 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 22%, indicating the rate at which GUD 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, GUD Holdings has fallen short of achieving a 20% return on equity (ROE), recording 20% instead. However, its return on assets (ROA) of 12% exceeds the AU Auto Components industry of 7.2%, indicating GUD Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for GUD Holdings’s debt level, has increased over the past 3 years from 7.4% to 20%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 62% to 59% 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 GUD Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research GUD Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GUD’s future growth? Take a look at our free research report of analyst consensus for GUD’s outlook.
- Financial Health: Are GUD’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 31 December 2018. 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.