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For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on St. Modwen Properties PLC (LON:SMP) useful as an attempt to give more color around how St. Modwen Properties is currently performing.
Commentary On SMP’s Past Performance
SMP’s trailing twelve-month earnings (from 31 May 2019) of UK£63m has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -25%, indicating the rate at which SMP is growing has accelerated. What’s enabled this growth? Let’s see whether it is solely owing to industry tailwinds, 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 5.9% instead. Furthermore, its return on assets (ROA) of 4.6% is below the GB Real Estate industry of 6.7%, 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 5.0% to 5.1%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 56% to 33% 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 better picture 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 31 May 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.