Yahoo Finance With 5.8% Earnings Growth, Did Savills plc (LON:SVS) Outperform The Industry?
Today I will take a look at Savills plc’s (LON:SVS) 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 real estate industry performed. As an investor, I find it beneficial to assess SVS’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 Savills
How Well Did SVS Perform?
SVS’s trailing twelve-month earnings (from 30 June 2018) of UK£77m has increased by 5.8% 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 11%, indicating the rate at which SVS is growing has slowed down. What could be happening here? Well, let’s examine what’s transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Savills has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. Furthermore, its return on assets (ROA) of 6.4% is below the GB Real Estate industry of 7.6%, indicating Savills’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Savills’s debt level, has declined over the past 3 years from 25% to 19%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 27% to 59% over the past 5 years.
What does this mean?
Though Savills’s past data is helpful, it is only one aspect of my investment thesis. While Savills 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 Savills to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SVS’s future growth? Take a look at our free research report of analyst consensus for SVS’s outlook.
Financial Health: Are SVS’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.
