Yahoo Finance Want To Invest In IWG PLC (LON:IWG)? Here’s How It Performed Lately
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at IWG PLC’s (LON:IWG) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for IWG
Did IWG perform worse than its track record and industry?
IWG’s trailing twelve-month earnings (from 31 December 2017) of UK£114.00m has declined by -17.87% 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 18.78%, indicating the rate at which IWG is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and whether the entire industry is facing the same headwind.
In the past couple of years, revenue growth has been lagging behind which implies that IWG’s bottom line has been driven by unsustainable cost-cutting. Eyeballing growth from a sector-level, the UK commercial services industry has been growing, albeit, at a subdued single-digit rate of 2.49% over the prior year, and a substantial 18.67% over the past half a decade. This growth is a median of profitable companies of 19 Commercial Services companies in GB including AssetCo, Rentokil Initial and Premier Technical Services Group. This means any recent headwind the industry is enduring, it’s hitting IWG harder than its peers.
In terms of returns from investment, IWG has not invested its equity funds well, leading to a 15.67% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 4.24% is below the GB Commercial Services industry of 5.64%, indicating IWG’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for IWG’s debt level, has increased over the past 3 years from 8.40% to 9.22%.
What does this mean?
IWG’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 influencing its business. I suggest you continue to research IWG to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for IWG’s future growth? Take a look at our free research report of analyst consensus for IWG’s outlook.
Financial Health: Is IWG’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 2017. 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.
