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 AP Oil International Limited (SGX:5AU) useful as an attempt to give more color around how AP Oil International is currently performing.
How Well Did 5AU Perform?
5AU’s trailing twelve-month earnings (from 30 June 2019) of S$2.2m has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -21%, indicating the rate at which 5AU is growing has accelerated. What’s the driver of this growth? Let’s see if it is solely a result of an industry uplift, or if AP Oil International has experienced some company-specific growth.
In terms of returns from investment, AP Oil International has fallen short of achieving a 20% return on equity (ROE), recording 4.2% instead. Furthermore, its return on assets (ROA) of 2.2% is below the SG Chemicals industry of 4.0%, indicating AP Oil International’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for AP Oil International’s debt level, has declined over the past 3 years from 6.4% to 2.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 5.3% to 8.1% over the past 5 years.
What does this mean?
Though AP Oil International’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn’t always indicative of a continued optimistic outlook. There may be factors that are impacting the industry as a whole, thus the high industry growth rate over the same time period. I recommend you continue to research AP Oil International to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 5AU’s future growth? Take a look at our free research report of analyst consensus for 5AU’s outlook.
- Financial Health: Are 5AU’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 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 firstname.lastname@example.org. 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.