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Should Bertrandt Aktiengesellschaft's (ETR:BDT) Recent Earnings Decline Worry You?

Simply Wall St

Examining Bertrandt Aktiengesellschaft's (XTRA:BDT) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess BDT's latest performance announced on 30 September 2019 and weight these figures against its longer term trend and industry movements.

See our latest analysis for Bertrandt

How Did BDT's Recent Performance Stack Up Against Its Past?

BDT's trailing twelve-month earnings (from 30 September 2019) of €39m has declined by -18% 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 -9.5%, indicating the rate at which BDT is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and if the whole industry is facing the same headwind.

XTRA:BDT Income Statement, January 25th 2020

In terms of returns from investment, Bertrandt has fallen short of achieving a 20% return on equity (ROE), recording 9.4% instead. Furthermore, its return on assets (ROA) of 5.2% is below the DE Professional Services industry of 6.0%, indicating Bertrandt's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Bertrandt’s debt level, has declined over the past 3 years from 15% to 7.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.03% to 52% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. In some cases, companies that face a prolonged period of diminishing earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I recommend you continue to research Bertrandt to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BDT’s future growth? Take a look at our free research report of analyst consensus for BDT’s outlook.
  2. Financial Health: Are BDT’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 30 September 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 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.

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.