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When FW Thorpe Plc (LON:TFW) released its most recent earnings update (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were FW Thorpe's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not TFW actually performed well. Below is a quick commentary on how I see TFW has performed.
Did TFW beat its long-term earnings growth trend and its industry?
TFW's trailing twelve-month earnings (from 31 December 2018) of UK£17m has jumped 16% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which TFW is growing has accelerated. What's enabled this growth? Let's take a look at if it is solely attributable to an industry uplift, or if FW Thorpe has seen some company-specific growth.
In terms of returns from investment, FW Thorpe has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 11% exceeds the GB Electrical industry of 8.1%, indicating FW Thorpe has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for FW Thorpe’s debt level, has declined over the past 3 years from 16% to 14%.
What does this mean?
Though FW Thorpe's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research FW Thorpe to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TFW’s future growth? Take a look at our free research report of analyst consensus for TFW’s outlook.
- Financial Health: Are TFW’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 email@example.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.