Yahoo Finance Aggreko Plc (LON:AGK): Has Recent Earnings Growth Beaten Long-Term Trend?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
When Aggreko Plc (LON:AGK) released its most recent earnings update (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Aggreko performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see AGK has performed.
See our latest analysis for Aggreko
Did AGK's recent earnings growth beat the long-term trend and the industry?
AGK's trailing twelve-month earnings (from 31 December 2018) of UK£125m has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -19%, indicating the rate at which AGK is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is merely a result of an industry uplift, or if Aggreko has experienced some company-specific growth.
In terms of returns from investment, Aggreko has fallen short of achieving a 20% return on equity (ROE), recording 9.1% instead. However, its return on assets (ROA) of 6.2% exceeds the GB Commercial Services industry of 5.3%, indicating Aggreko has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Aggreko’s debt level, has declined over the past 3 years from 16% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 36% to 56% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be variables that are influencing the entire industry hence the high industry growth rate over the same time frame. I recommend you continue to research Aggreko to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AGK’s future growth? Take a look at our free research report of analyst consensus for AGK’s outlook.
Financial Health: Are AGK’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 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.
