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Pets at Home Group Plc (LON:PETS): Has Recent Earnings Growth Beaten Long-Term Trend?

Simply Wall St

When Pets at Home Group Plc (LSE:PETS) announced its most recent earnings (10 October 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how at Home Group performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see PETS has performed.

See our latest analysis for at Home Group

Could PETS beat the long-term trend and outperform its industry?

PETS's trailing twelve-month earnings (from 10 October 2019) of UK£50m has jumped 36% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.3%, indicating the rate at which PETS is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is merely attributable to an industry uplift, or if at Home Group has seen some company-specific growth.

LSE:PETS Income Statement, February 3rd 2020

In terms of returns from investment, at Home Group has fallen short of achieving a 20% return on equity (ROE), recording 5.5% instead. However, its return on assets (ROA) of 3.5% exceeds the GB Specialty Retail industry of 3.4%, 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 9.3% to 6.3%.

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 have performed well in the past, such as at Home Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research at Home Group to get a more holistic view of the stock by looking at:

  1. 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.
  2. 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.
  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 10 October 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.

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