Does Multi-Chem Limited's (SGX:AWZ) 6.3% Earnings Growth Reflect The Long-Term Trend?
Understanding how Multi-Chem Limited (SGX:AWZ) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how Multi-Chem is doing by comparing its latest earnings with its long-term trend as well as the performance of its electronic industry peers.
Check out our latest analysis for Multi-Chem
How Did AWZ's Recent Performance Stack Up Against Its Past?
AWZ's trailing twelve-month earnings (from 30 June 2019) of S$7.8m has increased by 6.3% 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 12%, indicating the rate at which AWZ 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 entire industry is experiencing the hit as well.
In terms of returns from investment, Multi-Chem has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 3.6% is below the SG Electronic industry of 4.8%, indicating Multi-Chem's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Multi-Chem’s debt level, has increased over the past 3 years from 7.7% to 8.5%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 28% to 4.9% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Multi-Chem has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Multi-Chem to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AWZ’s future growth? Take a look at our free research report of analyst consensus for AWZ’s outlook.
Financial Health: Are AWZ’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.
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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.
