After reading Venture Corporation Limited's (SGX:V03) most recent earnings announcement (31 March 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 Venture's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

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Was V03's recent earnings decline indicative of a tough track record?

V03's trailing twelve-month earnings (from 31 March 2019) of S$377m has declined by -7.5% 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 32%, indicating the rate at which V03 is growing has slowed down. Why is this? Well, let's look at what's transpiring with margins and whether the rest of the industry is experiencing the hit as well.

In terms of returns from investment, Venture has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 11% exceeds the SG Electronic industry of 4.1%, indicating Venture has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Venture’s debt level, has increased over the past 3 years from 9.3% to 18%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 9.6% to 0.7% over the past 5 years.

What does this mean?

Venture'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 impacting its business. I suggest you continue to research Venture to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for V03’s future growth? Take a look at our free research report of analyst consensus for V03’s outlook.

2. Financial Health: Are V03’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.