Examining Bega Cheese Limited's (ASX:BGA) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess BGA's latest performance announced on 29 December 2019 and weigh these figures against its longer term trend and industry movements.
Did BGA beat its long-term earnings growth trend and its industry?
BGA's trailing twelve-month earnings (from 29 December 2019) of AU$15m has jumped 16% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.2%, indicating the rate at which BGA is growing has accelerated. How has it been able to do this? Let's take a look at whether it is only a result of industry tailwinds, or if Bega Cheese has seen some company-specific growth.
In terms of returns from investment, Bega Cheese has fallen short of achieving a 20% return on equity (ROE), recording 1.9% instead. Furthermore, its return on assets (ROA) of 1.8% is below the AU Food industry of 5.7%, indicating Bega Cheese's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Bega Cheese’s debt level, has declined over the past 3 years from 12% to 4.3%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 27% to 40% over the past 5 years.
What does this mean?
Bega Cheese'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. You should continue to research Bega Cheese to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BGA’s future growth? Take a look at our free research report of analyst consensus for BGA’s outlook.
Financial Health: Are BGA’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 29 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 firstname.lastname@example.org. 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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