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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 Tassal Group Limited (ASX:TGR) useful as an attempt to give more color around how Tassal Group is currently performing.
Commentary On TGR's Past Performance
TGR's trailing twelve-month earnings (from 31 December 2018) of AU$62m has increased by 5.0% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.0%, indicating the rate at which TGR is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Tassal Group has fallen short of achieving a 20% return on equity (ROE), recording 10.0% instead. However, its return on assets (ROA) of 6.8% exceeds the AU Food industry of 4.8%, indicating Tassal Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Tassal Group’s debt level, has declined over the past 3 years from 11% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 23% to 27% over the past 5 years.
What does this mean?
Tassal Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Tassal Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Tassal Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TGR’s future growth? Take a look at our free research report of analyst consensus for TGR’s outlook.
- Financial Health: Are TGR’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 December 2018. 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 email@example.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.