Examining Rathbone Brothers Plc’s (LON:RAT) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RAT’s latest performance announced on 30 June 2018 and compare these figures to its longer term trend and industry movements.
Could RAT beat the long-term trend and outperform its industry?
RAT’s trailing twelve-month earnings (from 30 June 2018) of UK£61m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.3%, indicating the rate at which RAT is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely attributable to industry tailwinds, or if Rathbone Brothers has seen some company-specific growth.
In terms of returns from investment, Rathbone Brothers has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. Furthermore, its return on assets (ROA) of 2.3% is below the GB Capital Markets industry of 6.4%, indicating Rathbone Brothers’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Rathbone Brothers’s debt level, has declined over the past 3 years from 20% to 17%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.2% to 5.3% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Rathbone Brothers to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RAT’s future growth? Take a look at our free research report of analyst consensus for RAT’s outlook.
- Financial Health: Are RAT’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 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 firstname.lastname@example.org.