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With 3.4% Earnings Growth, Did Novozymes A/S (CPH:NZYM B) Outperform The Industry?

Simply Wall St

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Analyzing Novozymes A/S's (CPH:NZYM B) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess NZYM B's recent performance announced on 31 December 2018 and compare these figures to its long-term trend and industry movements.

Check out our latest analysis for Novozymes

Did NZYM B beat its long-term earnings growth trend and its industry?

NZYM B's trailing twelve-month earnings (from 31 December 2018) of ø3.2b has increased by 3.4% 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 7.0%, indicating the rate at which NZYM B is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the whole industry is feeling the heat.

CPSE:NZYM B Income Statement, March 28th 2019

In terms of returns from investment, Novozymes has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the DK Chemicals industry of 5.6%, indicating Novozymes has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Novozymes’s debt level, has increased over the past 3 years from 28% to 29%.

What does this mean?

While past data is useful, it 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 Novozymes to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for NZYM B’s future growth? Take a look at our free research report of analyst consensus for NZYM B’s outlook.
  2. Financial Health: Are NZYM B’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.
  3. 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.

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.