Methanex Corporation's (TSE:MX) Earnings Grew 24%, Did It Beat Long-Term Trend?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Methanex Corporation (TSE:MX) useful as an attempt to give more color around how Methanex is currently performing.
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How Did MX's Recent Performance Stack Up Against Its Past?
MX's trailing twelve-month earnings (from 31 March 2019) of US$439m has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 1.3%, indicating the rate at which MX is growing has accelerated. What's the driver of this growth? Well, let’s take a look at whether it is only attributable to industry tailwinds, or if Methanex has experienced some company-specific growth.
In terms of returns from investment, Methanex has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the CA Chemicals industry of 4.8%, indicating Methanex has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Methanex’s debt level, has increased over the past 3 years from 3.2% to 17%.
What does this mean?
Though Methanex's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Methanex to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MX’s future growth? Take a look at our free research report of analyst consensus for MX’s outlook.
Financial Health: Are MX’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 31 March 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.
