U.S. Markets closed

Should You Be Concerned With HAEMATO AG's (FRA:HAE) -9.8% Earnings Drop?

Simply Wall St

Measuring HAEMATO AG's (FRA:HAE) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess HAE's recent performance announced on 31 December 2018 and compare these figures to its historical trend and industry movements.

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Check out our latest analysis for HAEMATO

Did HAE perform worse than its track record and industry?

HAE's trailing twelve-month earnings (from 31 December 2018) of €6.3m has declined by -9.8% 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 1.6%, indicating the rate at which HAE is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well.

DB:HAE Income Statement, May 24th 2019

In terms of returns from investment, HAEMATO has fallen short of achieving a 20% return on equity (ROE), recording 8.3% instead. However, its return on assets (ROA) of 6.0% exceeds the DE Healthcare industry of 3.8%, indicating HAEMATO has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for HAEMATO’s debt level, has increased over the past 3 years from 4.5% to 6.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 49% to 20% over the past 5 years.

What does this mean?

Though HAEMATO's past data is helpful, it is only one aspect of my investment thesis. Usually companies that experience a drawn out period of reduction in earnings are going through some sort of reinvestment phase Although, if the whole industry is struggling to grow over time, it may be a signal of a structural shift, which makes HAEMATO and its peers a higher risk investment. You should continue to research HAEMATO to get a better picture of the stock by looking at:

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