Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess SeaLink Travel Group Limited's (ASX:SLK) 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.
See our latest analysis for SeaLink Travel Group
Commentary On SLK's Past Performance
SLK's trailing twelve-month earnings (from 30 June 2019) of AU$22m has jumped 10% 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 18%, indicating the rate at which SLK is growing has slowed down. What could be happening here? Well, let's examine what's occurring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, SeaLink Travel Group has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 8.4% exceeds the AU Hospitality industry of 7.6%, indicating SeaLink Travel Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for SeaLink Travel Group’s debt level, has declined over the past 3 years from 17% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 11% to 61% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While SeaLink Travel Group 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 SeaLink Travel 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 SLK’s future growth? Take a look at our free research report of analyst consensus for SLK’s outlook.
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Financial Health: Are SLK’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 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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