Yahoo Finance Pets at Home Group Plc (LON:PETS): Should The Recent Earnings Drop Worry You?
After reading Pets at Home Group Plc’s (LON:PETS) latest earnings update (29 March 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether PETS has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
See our latest analysis for at Home Group
Was PETS weak performance lately part of a long-term decline?
PETS’s trailing twelve-month earnings (from 29 March 2018) of UK£63m 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 35%, indicating the rate at which PETS is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, at Home Group has fallen short of achieving a 20% return on equity (ROE), recording 6.9% instead. However, its return on assets (ROA) of 5.0% exceeds the GB Specialty Retail industry of 4.6%, indicating at Home Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for at Home Group’s debt level, has declined over the past 3 years from 8.4% to 7.7%.
What does this mean?
at Home Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research at Home Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PETS’s future growth? Take a look at our free research report of analyst consensus for PETS’s outlook.
Financial Health: Are PETS’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 29 March 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.
