For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on NOS, S.G.P.S., S.A. (ENXTLS:NOS) useful as an attempt to give more color around how NOS S.G.P.S is currently performing.
Were NOS's earnings stronger than its past performances and the industry?
NOS's trailing twelve-month earnings (from 30 September 2019) of €154m has increased by 9.6% 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 18%, indicating the rate at which NOS is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, NOS S.G.P.S has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 5.4% exceeds the PT Media industry of 4.0%, indicating NOS S.G.P.S has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for NOS S.G.P.S’s debt level, has increased over the past 3 years from 7.1% to 9.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 94% to 86% over the past 5 years.
What does this mean?
Though NOS S.G.P.S's past data is helpful, it is only one aspect of my investment thesis. While NOS S.G.P.S 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 NOS S.G.P.S to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NOS’s future growth? Take a look at our free research report of analyst consensus for NOS’s outlook.
- Financial Health: Are NOS’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 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 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.
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