Yahoo Finance Was Beacon Lighting Group Limited's (ASX:BLX) Earnings Decline Part Of A Broader Industry Downturn?
Examining Beacon Lighting Group Limited's (ASX:BLX) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BLX's latest performance announced on 30 June 2019 and compare these figures to its longer term trend and industry movements.
View our latest analysis for Beacon Lighting Group
Was BLX weak performance lately part of a long-term decline?
BLX's trailing twelve-month earnings (from 30 June 2019) of AU$16m has declined by -18% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 5.3%, indicating the rate at which BLX is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Beacon Lighting Group has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 11% exceeds the AU Specialty Retail industry of 8.2%, indicating Beacon Lighting Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Beacon Lighting Group’s debt level, has declined over the past 3 years from 44% to 23%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 61% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Usually companies that endure a drawn out period of diminishing earnings are going through some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a signal of a structural change, which makes Beacon Lighting Group and its peers a riskier investment. I suggest you continue to research Beacon Lighting Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BLX’s future growth? Take a look at our free research report of analyst consensus for BLX’s outlook.
Financial Health: Are BLX’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 editorial-team@simplywallst.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.
