How Has Singapore Post Limited's (SGX:S08) Earnings Fared Against The Long Term Trend

Examining Singapore Post Limited's (SGX:S08) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess S08's latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.

See our latest analysis for Singapore Post

Commentary On S08's Past Performance

S08's trailing twelve-month earnings (from 30 June 2018) of S$98.9m has more than doubled from S$18.5m in the prior year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -7.0%, indicating the rate at which S08 is growing has accelerated. What's enabled this growth? Let's see whether it is only because of industry tailwinds, or if Singapore Post has seen some company-specific growth.

Over the past few years, Singapore Post top-line expansion has overtaken earnings and the growth rate of expenses. Though this has led to a margin contraction, it has cushioned Singapore Post's earnings contraction.

Viewing growth from a sector-level, the SG logistics industry has been growing its average earnings by double-digit 13.2% in the past year, and a more subdued 9.0% over the past half a decade. Since the Logistics sector in SG is relatively small, I’ve included similar companies in the wider region in order to get a better idea of the growth, which is a median of profitable companies of companies such as Keppel Telecommunications & Transportation, Vibrant Group and . This means whatever tailwind the industry is enjoying, Singapore Post is able to amplify this to its advantage.

In terms of returns from investment, Singapore Post has fallen short of achieving a 20% return on equity (ROE), recording 5.9% instead. Furthermore, its return on assets (ROA) of 3.9% is below the SG Logistics industry of 8.6%, indicating Singapore Post's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Singapore Post’s debt level, has declined over the past 3 years from 11.2% to 6.3%.

What does this mean?

Though Singapore Post'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. There could be variables that are impacting the entire industry hence the high industry growth rate over the same period of time. I suggest you continue to research Singapore Post to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for S08’s future growth? Take a look at our free research report of analyst consensus for S08’s outlook.
2. Financial Health: Are S08’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.
3. 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 editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.