Yahoo Finance Has Kathmandu Holdings Limited (NZSE:KMD) Improved Earnings Growth In Recent Times?
After reading Kathmandu Holdings Limited’s (NZSE:KMD) latest earnings update (31 July 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether KMD has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Check out our latest analysis for Kathmandu Holdings
Did KMD beat its long-term earnings growth trend and its industry?
KMD’s trailing twelve-month earnings (from 31 July 2018) of NZ$51m has jumped 33% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.8%, indicating the rate at which KMD is growing has accelerated. What’s enabled this growth? Let’s see whether it is only owing to industry tailwinds, or if Kathmandu Holdings has experienced some company-specific growth.
In terms of returns from investment, Kathmandu Holdings has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 8.4% exceeds the NZ Specialty Retail industry of 8.0%, indicating Kathmandu Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Kathmandu Holdings’s debt level, has increased over the past 3 years from 7.9% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 15% to 9.4% over the past 5 years.
What does this mean?
Kathmandu Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Kathmandu Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Kathmandu Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for KMD’s future growth? Take a look at our free research report of analyst consensus for KMD’s outlook.
Financial Health: Are KMD’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 July 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
