After reading Lalique Group SA's (SWX:LLQ) latest earnings update (30 June 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether LLQ has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Did LLQ perform worse than its track record and industry?
LLQ's trailing twelve-month earnings (from 30 June 2019) of €4.9m 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 -0.5%, indicating the rate at which LLQ is growing has slowed down. Why could this be happening? Well, let's look at what's going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Lalique Group has fallen short of achieving a 20% return on equity (ROE), recording 2.1% instead. Furthermore, its return on assets (ROA) of 1.8% is below the CH Personal Products industry of 5.8%, indicating Lalique Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Lalique Group’s debt level, has declined over the past 3 years from 6.8% to 2.8%.
What does this mean?
Lalique Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Usually companies that endure an extended period of diminishing earnings are going through some sort of reinvestment phase Though if the whole industry is struggling to grow over time, it may be a signal of a structural change, which makes Lalique Group and its peers a riskier investment. You should continue to research Lalique Group to get a better picture of the stock by looking at:
- Financial Health: Are LLQ’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.
- Valuation: What is LLQ worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LLQ is currently mispriced by the market.
- 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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. Thank you for reading.