Want To Invest In SDI Group plc (LON:SDI)? Here's How It Performed Lately
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at SDI Group plc's (AIM:SDI) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for SDI Group
Were SDI's earnings stronger than its past performances and the industry?
SDI's trailing twelve-month earnings (from 31 October 2019) of UK£2.2m has jumped 29% 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 46%, indicating the rate at which SDI is growing has slowed down. What could be happening here? Well, let's examine what's transpiring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, SDI Group has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 8.2% is below the GB Medical Equipment industry of 8.4%, indicating SDI Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for SDI Group’s debt level, has declined over the past 3 years from 12% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 9.2% to 18% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While SDI Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research SDI Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SDI’s future growth? Take a look at our free research report of analyst consensus for SDI’s outlook.
Financial Health: Are SDI’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 October 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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