Does Brooks Macdonald Group plc’s (LON:BRK) Past Performance Indicate A Weaker Future?

Measuring Brooks Macdonald Group plc’s (LON:BRK) 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 BRK’s recent performance announced on 30 June 2018 and compare these figures to its historical trend and industry movements.

Check out our latest analysis for Brooks Macdonald Group

How Well Did BRK Perform?

BRK’s trailing twelve-month earnings (from 30 June 2018) of UK£5m has declined by -15% 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 -12%, indicating the rate at which BRK is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is facing the same headwind.

AIM:BRK Income Statement Export October 29th 18
AIM:BRK Income Statement Export October 29th 18

In terms of returns from investment, Brooks Macdonald Group has fallen short of achieving a 20% return on equity (ROE), recording 5.5% instead. Furthermore, its return on assets (ROA) of 3.8% is below the GB Capital Markets industry of 6.2%, indicating Brooks Macdonald Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Brooks Macdonald Group’s debt level, has increased over the past 3 years from 13% to 17%.

What does this mean?

Brooks Macdonald Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Usually companies that experience a drawn out period of diminishing earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry expansion and disruption. I recommend you continue to research Brooks Macdonald Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BRK’s future growth? Take a look at our free research report of analyst consensus for BRK’s outlook.
  2. Financial Health: Are BRK’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 June 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.