Singapore Shipping Corporation Limited (SGX:S19): Should The Recent Earnings Drop Worry You?
Examining Singapore Shipping Corporation Limited's (SGX:S19) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess S19's latest performance announced on 30 September 2019 and weight these figures against its longer term trend and industry movements.
View our latest analysis for Singapore Shipping
Was S19's weak performance lately a part of a long-term decline?
S19's trailing twelve-month earnings (from 30 September 2019) of US$10m has declined by -9.1% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 3.5%, indicating the rate at which S19 is growing has slowed down. Why is this? Let's examine what's occurring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Singapore Shipping has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 6.7% exceeds the SG Shipping industry of 5.0%, indicating Singapore Shipping has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Singapore Shipping’s debt level, has declined over the past 3 years from 7.5% to 7.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 27% to 66% over the past 5 years.
What does this mean?
Though Singapore Shipping's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Singapore Shipping to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for S19’s future growth? Take a look at our free research report of analyst consensus for S19’s outlook.
Financial Health: Are S19’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 September 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.
