After reading Delegat Group Limited's (NZSE:DGL) most recent earnings announcement (31 December 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Delegat Group's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

See our latest analysis for Delegat Group

Have DGL's earnings improved against past performances and the industry?

DGL's trailing twelve-month earnings (from 31 December 2019) of NZ$52m has declined by -1.4% 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 6.3%, indicating the rate at which DGL is growing has slowed down. Why is this? Let's examine what's occurring with margins and whether the whole industry is feeling the heat.

In terms of returns from investment, Delegat Group has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 7.9% exceeds the NZ Beverage industry of 4.9%, indicating Delegat Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Delegat Group’s debt level, has declined over the past 3 years from 13% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 76% to 77% over the past 5 years.

What does this mean?

Though Delegat Group's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research Delegat Group to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for DGL’s future growth? Take a look at our free research report of analyst consensus for DGL’s outlook.

2. Financial Health: Are DGL’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 31 December 2019. This may not be consistent with full year annual report figures.

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