When Sunland Group Limited’s (ASX:SDG) announced its latest earnings (30 June 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Sunland Group’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not SDG actually performed well. Below is a quick commentary on how I see SDG has performed.
View our latest analysis for Sunland Group
Did SDG perform worse than its track record and industry?
SDG’s trailing twelve-month earnings (from 30 June 2018) of AU$31m has declined by -11% 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 26%, indicating the rate at which SDG 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 rest of the industry is facing the same headwind.
In terms of returns from investment, Sunland Group has fallen short of achieving a 20% return on equity (ROE), recording 8.4% instead. Furthermore, its return on assets (ROA) of 4.9% is below the AU Real Estate industry of 5.2%, indicating Sunland Group’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Sunland Group’s debt level, has declined over the past 3 years from 9.4% to 7.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 4.1% to 48% over the past 5 years.
What does this mean?
Though Sunland 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 suggest you continue to research Sunland Group to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for SDG’s future growth? Take a look at our free research report of analyst consensus for SDG’s outlook.
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Financial Health: Are SDG’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.
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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 June 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 editorial-team@simplywallst.com.