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Has easyHotel plc’s (LON:EZH) Earnings Momentum Changed Recently?

When easyHotel plc (LON:EZH) announced its most recent earnings (30 September 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well easyHotel has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see EZH has performed.

See our latest analysis for easyHotel

Did EZH’s recent earnings growth beat the long-term trend and the industry?

EZH’s trailing twelve-month earnings (from 30 September 2018) of UK£647k has increased by 0.6% compared to the previous year.

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Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.9%, indicating the rate at which EZH is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is solely because of an industry uplift, or if easyHotel has seen some company-specific growth.

AIM:EZH Income Statement Export December 25th 18
AIM:EZH Income Statement Export December 25th 18

In terms of returns from investment, easyHotel has fallen short of achieving a 20% return on equity (ROE), recording 0.5% instead. Furthermore, its return on assets (ROA) of 0.3% is below the GB Hospitality industry of 6.4%, indicating easyHotel’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for easyHotel’s debt level, has declined over the past 3 years from 2.3% to 0.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 2.3% to 14% over the past 5 years.

What does this mean?

Though easyHotel’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are influencing the entire industry thus the high industry growth rate over the same time frame. You should continue to research easyHotel to get a more holistic view of the stock by looking at:

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

  2. Financial Health: Are EZH’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 30 September 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.