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Does Bunzl plc's (LON:BNZL) Recent Track Record Look Strong?

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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Bunzl plc (LON:BNZL) useful as an attempt to give more color around how Bunzl is currently performing.

View our latest analysis for Bunzl

How BNZL fared against its long-term earnings performance and its industry

BNZL's trailing twelve-month earnings (from 31 December 2018) of UK£327m has increased by 5.2% compared to the previous year.

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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 BNZL is growing has slowed down. To understand what's happening, let's look at what's going on with margins and if the rest of the industry is feeling the heat.

LSE:BNZL Income Statement, June 4th 2019
LSE:BNZL Income Statement, June 4th 2019

In terms of returns from investment, Bunzl has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. Furthermore, its return on assets (ROA) of 6.8% is below the GB Trade Distributors industry of 6.9%, indicating Bunzl's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Bunzl’s debt level, has declined over the past 3 years from 17% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 99% to 110% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Bunzl gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Bunzl to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BNZL’s future growth? Take a look at our free research report of analyst consensus for BNZL’s outlook.

  2. Financial Health: Are BNZL’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.

  3. 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.