For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Inland Homes PLC’s (LON:INL) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Inland Homes
Did INL’s recent earnings growth beat the long-term trend and the industry?INL’s trailing twelve-month earnings (from 31 December 2017) of UK£16.44m has jumped 39.82% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 30.70%, indicating the rate at which INL is growing has accelerated. What’s enabled this growth? Let’s see if it is merely attributable to an industry uplift, or if Inland Homes has experienced some company-specific growth.
In the last few years, Inland Homes expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the UK real estate industry has been growing its average earnings by double-digit 11.61% over the past twelve months, and 23.12% over the past five years. This suggests that any uplift the industry is deriving benefit from, Inland Homes is able to amplify this to its advantage.In terms of returns from investment, Inland Homes has not invested its equity funds well, leading to a 12.20% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.75% is below the GB Real Estate industry of 7.81%, indicating Inland Homes’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Inland Homes’s debt level, has declined over the past 3 years from 11.01% to 5.36%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 23.49% to 70.25% over the past 5 years.
What does this mean?
Inland Homes’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Inland Homes has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Inland Homes to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for INL’s future growth? Take a look at our free research report of analyst consensus for INL’s outlook.
- Financial Health: Is INL’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.