Simply Wall St April 7, 2020Did GEM perform worse than its...

Simply Wall St April 7, 2020

Did GEM perform worse than its track record and industry?

GEM’s trailing twelve-month earnings (from 31 December 2019) of AU$63m has declined by -13% 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 -0.8%, indicating the rate at which GEM is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the whole industry is experiencing the hit as well.

ASX:GEM Income Statement April 7th 2020

In terms of returns from investment, G8 Education has fallen short of achieving a 20% return on equity (ROE), recording 7.5% instead. However, its return on assets (ROA) of 6.6% exceeds the AU Consumer Services industry of 5.4%, indicating G8 Education has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for G8 Education’s debt level, has declined over the past 3 years from 15% to 8.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 40% to 46% over the past 5 years.

https://**.st/stocks/au/consumer-services/asx-gem/g8-education-shares/news/g8-education-limited-asxgem-should-the-recent-earnings-drop-worry-you/

Really - DYOR