Yahoo Finance Should Metlifecare Limited’s (NZSE:MET) Recent Earnings Worry You?
Today I will take a look at Metlifecare Limited’s (NZSE:MET) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the healthcare industry performed. As an investor, I find it beneficial to assess MET’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
See our latest analysis for Metlifecare
How Well Did MET Perform?
MET’s trailing twelve-month earnings (from 31 December 2017) of NZ$142.9m has declined by -46.7% 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 39.4%, indicating the rate at which MET is growing has slowed down. Why could this be happening? Well, let’s look at what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
Over the past couple of years, revenue growth has not been able to catch up, which indicates that Metlifecare’s bottom line has been propelled by unsustainable cost-reductions. Inspecting growth from a sector-level, the NZ healthcare industry has been growing, albeit, at a unexciting single-digit rate of 8.8% over the prior year, and a substantial 39.4% over the past five. This growth is a median of profitable companies of 6 Healthcare companies in NZ including Abano Healthcare Group, Arvida Group and Ryman Healthcare. This means whatever uplift the industry is enjoying, Metlifecare has not been able to reap as much as its industry peers.
In terms of returns from investment, Metlifecare has fallen short of achieving a 20% return on equity (ROE), recording 10.1% instead. Furthermore, its return on assets (ROA) of 4.7% is below the NZ Healthcare industry of 5.3%, indicating Metlifecare’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Metlifecare’s debt level, has declined over the past 3 years from 0.9% to 0.4%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Metlifecare to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MET’s future growth? Take a look at our free research report of analyst consensus for MET’s outlook.
Financial Health: Are MET’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 December 2017. 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.
