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Did United Internet AG’s (FRA:UTDI) Recent Earnings Growth Beat The Trend?

Analyzing United Internet AG’s (FRA:UTDI) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess UTDI’s recent performance announced on 31 March 2018 and compare these figures to its long-term trend and industry movements. View out our latest analysis for United Internet

Were UTDI’s earnings stronger than its past performances and the industry?

UTDI’s trailing twelve-month earnings (from 31 March 2018) of €605.93m has jumped 89.01% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 21.05%, indicating the rate at which UTDI is growing has accelerated. How has it been able to do this? Let’s see whether it is only attributable to an industry uplift, or if United Internet has seen some company-specific growth.

Over the past couple of years, United Internet expanded its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Eyeballing growth from a sector-level, the DE internet industry has been growing its average earnings by double-digit 22.11% over the prior twelve months, and 21.67% over the last five years. This suggests that whatever tailwind the industry is profiting from, United Internet is capable of leveraging this to its advantage.

DB:UTDI Income Statement June 26th 18
DB:UTDI Income Statement June 26th 18

In terms of returns from investment, United Internet has not invested its equity funds well, leading to a 14.40% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 7.87% exceeds the DE Internet industry of 7.33%, indicating United Internet has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for United Internet’s debt level, has declined over the past 3 years from 17.59% to 9.30%.

What does this mean?

United Internet’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While United Internet 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 United Internet to get a more holistic view of the stock by looking at:

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

  2. Financial Health: Is UTDI’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 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.