For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Money3 Corporation Limited (ASX:MNY) useful as an attempt to give more color around how Money3 is currently performing.
View our latest analysis for Money3
How Well Did MNY Perform?
MNY's trailing twelve-month earnings (from 30 June 2019) of AU$24m has jumped 14% 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 22%, indicating the rate at which MNY is growing has slowed down. What could be happening here? Well, let's examine what's occurring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Money3 has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 9.1% exceeds the AU Consumer Finance industry of 8.1%, indicating Money3 has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Money3’s debt level, has declined over the past 3 years from 18% to 13%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 36% to 57% over the past 5 years.
What does this mean?
Money3's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Money3 to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for MNY’s future growth? Take a look at our free research report of analyst consensus for MNY’s outlook.
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Financial Health: Are MNY’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.
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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.