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Does adesso AG's (ETR:ADN1) Recent Track Record Look Strong?

Simply Wall St

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 adesso AG (ETR:ADN1) useful as an attempt to give more color around how adesso is currently performing.

Check out our latest analysis for adesso

Could ADN1 beat the long-term trend and outperform its industry?

ADN1's trailing twelve-month earnings (from 31 December 2018) of €13m has jumped 21% 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 34%, indicating the rate at which ADN1 is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the entire industry is feeling the heat.

XTRA:ADN1 Income Statement, August 24th 2019

In terms of returns from investment, adesso has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 6.3% exceeds the DE IT industry of 5.9%, indicating adesso has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for adesso’s debt level, has increased over the past 3 years from 15% to 18%.

What does this mean?

Though adesso's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research adesso to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for ADN1’s future growth? Take a look at our free research report of analyst consensus for ADN1’s outlook.
  2. Financial Health: Are ADN1’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.