Yahoo Finance NMC Health Plc (LON:NMC): Has Recent Earnings Growth Beaten Long-Term Trend?
After looking at NMC Health Plc's (LSE:NMC) latest earnings update (30 June 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
View our latest analysis for NMC Health
Did NMC beat its long-term earnings growth trend and its industry?
NMC's trailing twelve-month earnings (from 30 June 2019) of US$270m has jumped 26% 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 29%, indicating the rate at which NMC is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, NMC Health has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 8.4% exceeds the GB Healthcare industry of 2.9%, indicating NMC Health has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for NMC Health’s debt level, has declined over the past 3 years from 12% to 10%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 79% to 124% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While NMC Health 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 NMC Health to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for NMC’s future growth? Take a look at our free research report of analyst consensus for NMC’s outlook.
Financial Health: Are NMC’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.
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.
