Does FIH group plc’s (LON:FIH) 44% Earnings Growth Reflect The Long-Term Trend?

Measuring FIH group plc’s (LON:FIH) 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 FIH’s recent performance announced on 30 September 2018 and compare these figures to its historical trend and industry movements.

View our latest analysis for FIH group

Commentary On FIH’s Past Performance

FIH’s trailing twelve-month earnings (from 30 September 2018) of UK£2.5m has jumped 44% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.1%, indicating the rate at which FIH is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if FIH group has experienced some company-specific growth.

AIM:FIH Income Statement Export December 14th 18
AIM:FIH Income Statement Export December 14th 18

In terms of returns from investment, FIH group has fallen short of achieving a 20% return on equity (ROE), recording 5.8% instead. However, its return on assets (ROA) of 3.9% exceeds the GB Consumer Retailing industry of 3.8%, indicating FIH group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for FIH group’s debt level, has declined over the past 3 years from 6.2% to 6.0%.

What does this mean?

Though FIH group’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as FIH group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research FIH group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for FIH’s future growth? Take a look at our free research report of analyst consensus for FIH’s outlook.
  2. Financial Health: Are FIH’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.
  3. 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 September 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.