Yahoo Finance Has Metro Inc. (TSE:MRU) Improved Earnings Growth In Recent Times?
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Metro Inc. (TSX:MRU) useful as an attempt to give more color around how Metro is currently performing.
See our latest analysis for Metro
How Well Did MRU Perform?
MRU's trailing twelve-month earnings (from 21 December 2019) of CA$679m has increased by 7.0% 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 15%, indicating the rate at which MRU is growing has slowed down. Why could this be happening? Well, let's examine what's transpiring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Metro has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.0% exceeds the CA Consumer Retailing industry of 5.4%, indicating Metro has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Metro’s debt level, has declined over the past 3 years from 16% to 9.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 44% to 45% over the past 5 years.
What does this mean?
Metro's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There may be factors that are influencing the industry as a whole, thus the high industry growth rate over the same time period. I recommend you continue to research Metro to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MRU’s future growth? Take a look at our free research report of analyst consensus for MRU’s outlook.
Financial Health: Are MRU’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 21 December 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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