When St. Modwen Properties PLC (LON:SMP) released its most recent earnings update (30 November 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how St. Modwen Properties performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see SMP has performed.
Check out our latest analysis for St. Modwen Properties
Commentary On SMP’s Past Performance
SMP’s trailing twelve-month earnings (from 30 November 2018) of UK£60m has increased by 1.0% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -18%, indicating the rate at which SMP is growing has accelerated. How has it been able to do this? Let’s see if it is solely owing to an industry uplift, or if St. Modwen Properties has experienced some company-specific growth.
In terms of returns from investment, St. Modwen Properties has fallen short of achieving a 20% return on equity (ROE), recording 5.8% instead. Furthermore, its return on assets (ROA) of 5.1% is below the GB Real Estate industry of 7.0%, indicating St. Modwen Properties’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for St. Modwen Properties’s debt level, has increased over the past 3 years from 4.3% to 5.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 58% to 30% over the past 5 years.
What does this mean?
Though St. Modwen Properties’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. You should continue to research St. Modwen Properties to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SMP’s future growth? Take a look at our free research report of analyst consensus for SMP’s outlook.
- Financial Health: Are SMP’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 November 2018. This may not be consistent with full year annual report figures.
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