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After reading Redde plc’s (LON:REDD) most recent earnings announcement (30 June 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Redde’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.
How Did REDD’s Recent Performance Stack Up Against Its Past?
REDD’s trailing twelve-month earnings (from 30 June 2018) of UK£35m has jumped 29% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -0.4%, indicating the rate at which REDD is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is merely attributable to an industry uplift, or if Redde has seen some company-specific growth.
In terms of returns from investment, Redde has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.3% exceeds the GB Transportation industry of 5.6%, indicating Redde has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Redde’s debt level, has increased over the past 3 years from 13% to 22%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 26% to 24% over the past 5 years.
What does this mean?
Though Redde’s past data is helpful, it is only one aspect of my investment thesis. While Redde has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Redde to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for REDD’s future growth? Take a look at our free research report of analyst consensus for REDD’s outlook.
- Financial Health: Are REDD’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 email@example.com.