Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Whitbread PLC’s (LON:WTB) 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.
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How Did WTB’s Recent Performance Stack Up Against Its Past?
WTB’s trailing twelve-month earnings (from 30 August 2018) of UK£436m has increased by 2.6% 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 6.8%, indicating the rate at which WTB is growing has slowed down. Why could this be happening? Well, let’s examine what’s transpiring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Whitbread has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 9.3% exceeds the GB Hospitality industry of 6.4%, indicating Whitbread has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Whitbread’s debt level, has increased over the past 3 years from 14% to 15%.
What does this mean?
Whitbread’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Whitbread to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WTB’s future growth? Take a look at our free research report of analyst consensus for WTB’s outlook.
- Financial Health: Are WTB’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 30 August 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 email@example.com.