Yahoo Finance Does BAE Systems plc's (LON:BA.) Past Performance Indicate A Stronger Future?
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Understanding how BAE Systems plc (LON:BA.) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how BAE Systems is doing by comparing its latest earnings with its long-term trend as well as the performance of its aerospace & defense industry peers.
View our latest analysis for BAE Systems
Were BA.'s earnings stronger than its past performances and the industry?
BA.'s trailing twelve-month earnings (from 31 December 2018) of UK£1.0b has jumped 21% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which BA. is growing has accelerated. What's the driver of this growth? Let's take a look at if it is merely due to an industry uplift, or if BAE Systems has seen some company-specific growth.
In terms of returns from investment, BAE Systems has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. Furthermore, its return on assets (ROA) of 4.8% is below the GB Aerospace & Defense industry of 5.7%, indicating BAE Systems's are utilized less efficiently. However, its return on capital (ROC), which also accounts for BAE Systems’s debt level, has increased over the past 3 years from 9.8% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 86% to 77% over the past 5 years.
What does this mean?
BAE Systems'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 BAE Systems gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research BAE Systems to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BA.’s future growth? Take a look at our free research report of analyst consensus for BA.’s outlook.
Financial Health: Are BA.’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.
