Measuring Spire Healthcare Group plc’s (LON:SPI) 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 SPI’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. View out our latest analysis for Spire Healthcare Group
Commentary On SPI’s Past PerformanceSPI’s trailing twelve-month earnings (from 31 December 2017) of UK£16.80m has more than halved from UK£53.60m in the prior year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 37.61%, indicating the rate at which SPI is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is facing the same headwind.
Over the last few years, revenue growth has failed to keep up which suggests that Spire Healthcare Group’s bottom line has been driven by unmaintainable cost-cutting. Viewing growth from a sector-level, the UK healthcare industry has been enduring some headwinds over the previous year, leading to an average earnings drop of -19.97%. This is a major change, given that the industry has constantly been delivering a a solid growth of 22.05% in the past half a decade. This growth is a median of profitable companies of 7 Healthcare companies in GB including Animalcare Group, UDG Healthcare and Georgia Healthcare Group. This means any recent headwind the industry is experiencing, it’s hitting Spire Healthcare Group harder than its peers.In terms of returns from investment, Spire Healthcare Group has not invested its equity funds well, leading to a 1.62% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 2.13% is below the GB Healthcare industry of 4.70%, indicating Spire Healthcare Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Spire Healthcare Group’s debt level, has increased over the past 3 years from 1.93% to 4.47%.
What does this mean?
Spire Healthcare 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 an extended period of decline in earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a signal of a structural shift, which makes Spire Healthcare Group and its peers a riskier investment. I recommend you continue to research Spire Healthcare Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SPI’s future growth? Take a look at our free research report of analyst consensus for SPI’s outlook.
- Financial Health: Is SPI’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.