With A -11% Earnings Drop, Did AptarGroup, Inc. (NYSE:ATR) Really Underperform?
When AptarGroup, Inc. (NYSE:ATR) released its most recent earnings update (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well AptarGroup has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see ATR has performed.
Check out our latest analysis for AptarGroup
Was ATR’s recent earnings decline worse than the long-term trend and the industry?
ATR’s trailing twelve-month earnings (from 31 December 2018) of US$195m has declined by -11% 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 3.9%, indicating the rate at which ATR is growing has slowed down. What could be happening here? Well, let’s look at what’s occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, AptarGroup has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. Furthermore, its return on assets (ROA) of 6.5% is below the US Packaging industry of 7.0%, indicating AptarGroup’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for AptarGroup’s debt level, has declined over the past 3 years from 16% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 91% over the past 5 years.
What does this mean?
AptarGroup’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research AptarGroup to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ATR’s future growth? Take a look at our free research report of analyst consensus for ATR’s outlook.
Financial Health: Are ATR’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 December 2018. This may not be consistent with full year annual report figures.
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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.
