Does Coats Group plc's (LON:COA) 11% Earnings Growth Make It An Outperformer?
Understanding Coats Group plc's (LON:COA) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Coats Group is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Check out our latest analysis for Coats Group
How COA fared against its long-term earnings performance and its industry
COA's trailing twelve-month earnings (from 30 June 2019) of US$71m has jumped 11% 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 26%, indicating the rate at which COA is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Coats Group has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 6.5% exceeds the GB Luxury industry of 6.1%, indicating Coats Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Coats Group’s debt level, has increased over the past 3 years from 11% to 20%.
What does this mean?
Coats Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Coats Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Coats Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for COA’s future growth? Take a look at our free research report of analyst consensus for COA’s outlook.
Financial Health: Are COA’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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.
