Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at bpost SA/NV's (ENXTBR:BPOST) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Was BPOST's weak performance lately a part of a long-term decline?
BPOST's trailing twelve-month earnings (from 30 June 2019) of €245m has declined by -6.4% 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 -2.2%, indicating the rate at which BPOST is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, bpost has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.4% exceeds the BE Logistics industry of 3.7%, indicating bpost has used its assets more efficiently. However, its return on capital (ROC), which also accounts for bpost’s debt level, has declined over the past 3 years from 37% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 10% to 132% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Usually companies that experience an extended period of reduction in earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry expansion and disruption. You should continue to research bpost to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BPOST’s future growth? Take a look at our free research report of analyst consensus for BPOST’s outlook.
- Financial Health: Are BPOST’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 June 2019. This may not be consistent with full year annual report figures.
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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. Thank you for reading.