Yahoo Finance Does Incitec Pivot Limited's (ASX:IPL) Recent Track Record Look Strong?
After looking at Incitec Pivot Limited's (ASX:IPL) latest earnings announcement (31 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. 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 Incitec Pivot's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
View our latest analysis for Incitec Pivot
Were IPL's earnings stronger than its past performances and the industry?
IPL's trailing twelve-month earnings (from 31 March 2019) of AU$242m has jumped 39% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -9.1%, indicating the rate at which IPL is growing has accelerated. What's enabled this growth? Let's see if it is merely because of an industry uplift, or if Incitec Pivot has experienced some company-specific growth.
In terms of returns from investment, Incitec Pivot has fallen short of achieving a 20% return on equity (ROE), recording 5.3% instead. Furthermore, its return on assets (ROA) of 4.2% is below the AU Chemicals industry of 12%, indicating Incitec Pivot's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Incitec Pivot’s debt level, has declined over the past 3 years from 6.9% to 6.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 43% to 55% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There could be factors that are impacting the industry as a whole, hence the high industry growth rate over the same time frame. I suggest you continue to research Incitec Pivot to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for IPL’s future growth? Take a look at our free research report of analyst consensus for IPL’s outlook.
Financial Health: Are IPL’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 March 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.
