Assessing Barratt Developments PLC's (LSE:BDEV) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BDEV's recent performance announced on 31 December 2019 and evaluate these figures to its longer term trend and industry movements.
How BDEV fared against its long-term earnings performance and its industry
BDEV's trailing twelve-month earnings (from 31 December 2019) of UK£752m has increased by 3.1% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 12%, indicating the rate at which BDEV is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Barratt Developments has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 11% exceeds the GB Consumer Durables industry of 9.0%, indicating Barratt Developments has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Barratt Developments’s debt level, has increased over the past 3 years from 15% to 17%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 5.7% to 4.1% over the past 5 years.
What does this mean?
Barratt Developments's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Barratt Developments has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Barratt Developments to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BDEV’s future growth? Take a look at our free research report of analyst consensus for BDEV’s outlook.
- Financial Health: Are BDEV’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 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 firstname.lastname@example.org. 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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