Yahoo Finance Does STM Group Plc's (LON:STM) -7.3% Earnings Drop Reflect A Longer Term Trend?
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Measuring STM Group Plc's (LON:STM) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess STM's recent performance announced on 31 December 2018 and weigh these figures against its long-term trend and industry movements.
See our latest analysis for STM Group
How Well Did STM Perform?
STM's trailing twelve-month earnings (from 31 December 2018) of UK£3.7m has declined by -7.3% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 38%, indicating the rate at which STM is growing has slowed down. What could be happening here? Let's examine what's going on with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, STM Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 8.8% exceeds the GB Capital Markets industry of 6.0%, indicating STM Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for STM Group’s debt level, has increased over the past 3 years from 11% to 13%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 17% to 5.0% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. You should continue to research STM Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for STM’s future growth? Take a look at our free research report of analyst consensus for STM’s outlook.
Financial Health: Are STM’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.
