Want To Invest In Schaffer Corporation Limited (ASX:SFC)? Here's How It Performed Lately
When Schaffer Corporation Limited (ASX:SFC) released its most recent earnings update (30 June 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Schaffer performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see SFC has performed.
View our latest analysis for Schaffer
Commentary On SFC's Past Performance
SFC's trailing twelve-month earnings (from 30 June 2019) of AU$23m has jumped 20% 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 43%, indicating the rate at which SFC is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Schaffer has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. However, its return on assets (ROA) of 12% is below the AU Auto Components industry of 14%, indicating Schaffer's are utilized less efficiently. Though, its return on capital (ROC), which also accounts for Schaffer’s debt level, has increased over the past 3 years from 6.2% to 27%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 69% to 26% over the past 5 years.
What does this mean?
Schaffer's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Schaffer 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 Schaffer to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SFC’s future growth? Take a look at our free research report of analyst consensus for SFC’s outlook.
Financial Health: Are SFC’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 June 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 editorial-team@simplywallst.com. 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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