Yahoo Finance Want To Invest In Aveo Group (ASX:AOG)? Here’s How It Performed Lately
Understanding Aveo Group’s (ASX:AOG) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Aveo Group is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.
View our latest analysis for Aveo Group
Were AOG’s earnings stronger than its past performances and the industry?
AOG’s trailing twelve-month earnings (from 30 June 2018) of AU$365.1m has jumped 44.4% 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 49.6%, indicating the rate at which AOG is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and whether the entire industry is facing the same headwind.
Over the past couple of years, revenue growth has failed to keep up which suggests that Aveo Group’s bottom line has been driven by unsustainable cost-cutting. Inspecting growth from a sector-level, the Australian real estate industry has been relatively flat in terms of earnings growth over the previous twelve months, levelling off from a solid 27.6% over the previous five years. This growth is a median of profitable companies of 19 Real Estate companies in AU including Desane Group Holdings, Hudson Investment Group and Servcorp. This shows that whatever near-term headwind the industry is facing, Aveo Group is relatively better-cushioned than its peers.
In terms of returns from investment, Aveo Group has fallen short of achieving a 20% return on equity (ROE), recording 15.9% instead. However, its return on assets (ROA) of 5.5% exceeds the AU Real Estate industry of 5.2%, indicating Aveo Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Aveo Group’s debt level, has declined over the past 3 years from 2.5% to 1.9%.
What does this mean?
Aveo Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Aveo Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Aveo Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AOG’s future growth? Take a look at our free research report of analyst consensus for AOG’s outlook.
Financial Health: Are AOG’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.
