Yahoo Finance With 10% Earnings Growth, Did Merlin Entertainments plc (LON:MERL) Outperform The Industry?
Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
Assessing Merlin Entertainments plc's (LON:MERL) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how Merlin Entertainments is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its hospitality industry peers.
See our latest analysis for Merlin Entertainments
Could MERL beat the long-term trend and outperform its industry?
MERL's trailing twelve-month earnings (from 29 December 2018) of UK£230m has jumped 10% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.9%, indicating the rate at which MERL is growing has accelerated. What's enabled this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if Merlin Entertainments has experienced some company-specific growth.
In terms of returns from investment, Merlin Entertainments has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 7.4% exceeds the GB Hospitality industry of 6.2%, indicating Merlin Entertainments has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Merlin Entertainments’s debt level, has declined over the past 3 years from 12% to 9.8%.
What does this mean?
Though Merlin Entertainments's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Merlin Entertainments gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Merlin Entertainments to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MERL’s future growth? Take a look at our free research report of analyst consensus for MERL’s outlook.
Financial Health: Are MERL’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 29 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 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.
