Did adidas AG’s (FRA:ADS) Recent Earnings Growth Beat The Trend?
Assessing adidas AG’s (DB:ADS) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how adidas is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its luxury industry peers. See our latest analysis for adidas
Commentary On ADS’s Past Performance
I look at the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to analyze different stocks on a similar basis, using the most relevant data points. For adidas, its latest earnings (trailing twelve month) is €1.43B, which, relative to last year’s figure, has moved up by 29.04%. Given that these values may be somewhat nearsighted, I’ve determined an annualized five-year value for ADS’s earnings, which stands at €792.57M This means generally, adidas has been able to gradually raise its bottom line over the last couple of years as well.
What’s enabled this growth? Let’s see if it is only due to industry tailwinds, or if adidas has seen some company-specific growth. Over the past couple of years, adidas expanded its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Inspecting growth from a sector-level, the DE luxury industry has been growing its average earnings by double-digit 16.14% over the prior twelve months, and a more muted 2.47% over the past five years. This suggests that whatever tailwind the industry is benefiting from, adidas is capable of amplifying this to its advantage.
What does this mean?
adidas’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While adidas has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research adidas to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ADS’s future growth? Take a look at our free research report of analyst consensus for ADS’s outlook.
Financial Health: Is ADS’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 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
