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Should Hays plc's (LON:HAS) Recent Earnings Decline Worry You?

Simply Wall St
·3-min read

Measuring Hays plc's (LSE:HAS) track record of past performance is a valuable exercise for investors. It allows 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 HAS's recent performance announced on 31 December 2019 and compare these figures to its historical trend and industry movements.

Check out our latest analysis for Hays

Was HAS's recent earnings decline worse than the long-term trend and the industry?

HAS's trailing twelve-month earnings (from 31 December 2019) of UK£144m has declined by -17% 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 10%, indicating the rate at which HAS is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and whether the entire industry is feeling the heat.

LSE:HAS Income Statement May 11th 2020
LSE:HAS Income Statement May 11th 2020

In terms of returns from investment, Hays has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.4% exceeds the GB Professional Services industry of 7.4%, indicating Hays has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Hays’s debt level, has declined over the past 3 years from 32% to 24%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Hays to get a more holistic view of the stock by looking at:

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

  2. Financial Health: Are HAS’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 2019. This may not be consistent with full year annual report figures.

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.

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. Thank you for reading.