Measuring K-Bro Linen Inc.’s (TSE:KBL) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess KBL’s recent performance announced on 31 December 2018 and compare these figures to its historical trend and industry movements.
How Well Did KBL Perform?
KBL’s trailing twelve-month earnings (from 31 December 2018) of CA$6.2m has increased by 7.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -14%, indicating the rate at which KBL is growing has accelerated. How has it been able to do this? Let’s take a look at if it is solely because of industry tailwinds, or if K-Bro Linen has experienced some company-specific growth.
In terms of returns from investment, K-Bro Linen has fallen short of achieving a 20% return on equity (ROE), recording 3.1% instead. Furthermore, its return on assets (ROA) of 2.8% is below the CA Commercial Services industry of 5.1%, indicating K-Bro Linen’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for K-Bro Linen’s debt level, has declined over the past 3 years from 14% to 3.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 28% to 35% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. There may be factors that are impacting the entire industry thus the high industry growth rate over the same period of time. You should continue to research K-Bro Linen to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KBL’s future growth? Take a look at our free research report of analyst consensus for KBL’s outlook.
- Financial Health: Are KBL’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.