Assessing United Overseas Australia Limited’s (ASX:UOS) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess UOS’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for United Overseas Australia
Despite a decline, did UOS underperform the long-term trend and the industry?UOS’s trailing twelve-month earnings (from 31 December 2017) of AU$109.07m has declined by -32.54% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.49%, indicating the rate at which UOS is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is facing the same headwind.
Revenue growth over the last couple of years, has been positive, however, earnings growth has not been able to catch up, meaning United Overseas Australia has been increasing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the Australian real estate industry has been growing, albeit, at a subdued single-digit rate of 7.50% over the previous year, and a substantial 32.23% over the past five years. This means that any tailwind the industry is deriving benefit from, United Overseas Australia has not been able to realize the gains unlike its industry peers.In terms of returns from investment, United Overseas Australia has not invested its equity funds well, leading to a 9.13% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 4.48% is below the AU Real Estate industry of 6.18%, indicating United Overseas Australia’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for United Overseas Australia’s debt level, has declined over the past 3 years from 11.33% to 9.64%.
What does this mean?
Though United Overseas Australia’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research United Overseas Australia to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for UOS’s future growth? Take a look at our free research report of analyst consensus for UOS’s outlook.
- Financial Health: Is UOS’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.