Investors with a long-term horizong may find it valuable to assess QinetiQ Group plc's (LSE:QQ.) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how QinetiQ Group is currently performing.

Check out our latest analysis for QinetiQ Group

How Did QQ.'s Recent Performance Stack Up Against Its Past?

QQ.'s trailing twelve-month earnings (from 30 September 2019) of UK£126m has increased by 1.5% 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 7.0%, indicating the rate at which QQ. is growing has slowed down. What could be happening here? Well, let's look at what's going on with margins and if the whole industry is experiencing the hit as well.

In terms of returns from investment, QinetiQ Group has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 9.5% exceeds the GB Aerospace & Defense industry of 5.6%, indicating QinetiQ Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for QinetiQ Group’s debt level, has declined over the past 3 years from 27% to 13%.

What does this mean?

Though QinetiQ Group'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 suggest you continue to research QinetiQ Group to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for QQ.’s future growth? Take a look at our free research report of analyst consensus for QQ.’s outlook.

2. Financial Health: Are QQ.’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.

3. 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.

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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