Yahoo Finance Want To Invest In Indofood Agri Resources Ltd (SGX:5JS)? Here’s How It Performed Lately
Measuring Indofood Agri Resources Ltd’s (SGX:5JS) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 5JS’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Indofood Agri Resources
Despite a decline, did 5JS underperform the long-term trend and the industry?
5JS’s trailing twelve-month earnings (from 31 March 2018) of S$326.55b has declined by -43.91% 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 -25.27%, indicating the rate at which 5JS is growing has slowed down. Why could this be happening? Well, let’s look at what’s occurring with margins and whether the whole industry is feeling the heat.
Revenue growth in the last couple of years, has been positive, nevertheless earnings growth has been declining. This suggest that Indofood Agri Resources has been growing expenses, which is harming margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the SG food industry has been enduring some headwinds in the past twelve months, leading to an average earnings drop of -10.89%. This is a significant change, given that the industry has been delivering a positive rate of 3.15%, on average, over the previous five years. This means whatever recent headwind the industry is enduring, it’s hitting Indofood Agri Resources harder than its peers.
In terms of returns from investment, Indofood Agri Resources has not invested its equity funds well, leading to a 1.75% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 2.23% is below the SG Food industry of 3.30%, indicating Indofood Agri Resources’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Indofood Agri Resources’s debt level, has declined over the past 3 years from 4.52% to 2.65%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 29.87% to 50.07% over the past 5 years.
What does this mean?
Though Indofood Agri Resources’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face an extended period of decline in earnings are undergoing some sort of reinvestment phase However, if the whole industry is struggling to grow over time, it may be a signal of a structural change, which makes Indofood Agri Resources and its peers a higher risk investment. You should continue to research Indofood Agri Resources to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 5JS’s future growth? Take a look at our free research report of analyst consensus for 5JS’s outlook.
Financial Health: Is 5JS’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.
