Yahoo Finance Pennant International Group plc (LON:PEN): Should The Recent Earnings Drop Worry You?
Today I will take a look at Pennant International Group plc’s (LON:PEN) most recent earnings update (30 June 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the software industry performed. As an investor, I find it beneficial to assess PEN’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Check out our latest analysis for Pennant International Group
Was PEN’s recent earnings decline indicative of a tough track record?
PEN’s trailing twelve-month earnings (from 30 June 2018) of UK£2.6m has declined by -7.6% 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 2.1%, indicating the rate at which PEN is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Pennant International Group 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 17% exceeds the GB Software industry of 8.7%, indicating Pennant International Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Pennant International Group’s debt level, has increased over the past 3 years from 2.7% to 23%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 0.9% to 0.2% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Pennant International Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PEN’s future growth? Take a look at our free research report of analyst consensus for PEN’s outlook.
Financial Health: Are PEN’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 editorial-team@simplywallst.com.
