For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on AptarGroup, Inc. (NYSE:ATR) useful as an attempt to give more color around how AptarGroup is currently performing.
How Did ATR's Recent Performance Stack Up Against Its Past?
ATR's trailing twelve-month earnings (from 30 June 2019) of US$217m has declined by -0.7% 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 2.7%, indicating the rate at which ATR is growing has slowed down. What could be happening here? Let's examine what's going on with margins and whether the entire 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. However, its return on assets (ROA) of 6.9% exceeds the US Packaging industry of 6.1%, indicating AptarGroup has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for AptarGroup’s debt level, has declined over the past 3 years from 15% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 37% to 79% 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 capricious earnings, can have many factors influencing its business. You should continue to research AptarGroup to get a more holistic view 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 30 June 2019. 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 email@example.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.