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Does Brenntag AG's (ETR:BNR) Recent Track Record Look Strong?

Simply Wall St

After looking at Brenntag AG's (XTRA:BNR) latest earnings announcement (30 June 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

See our latest analysis for Brenntag

How BNR fared against its long-term earnings performance and its industry

BNR's trailing twelve-month earnings (from 30 June 2019) of €467m has jumped 22% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.8%, indicating the rate at which BNR is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is merely owing to an industry uplift, or if Brenntag has experienced some company-specific growth.

XTRA:BNR Income Statement, November 2nd 2019

In terms of returns from investment, Brenntag has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 6.5% exceeds the DE Trade Distributors industry of 2.5%, indicating Brenntag has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Brenntag’s debt level, has declined over the past 3 years from 12% to 11%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Brenntag 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 Brenntag to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BNR’s future growth? Take a look at our free research report of analyst consensus for BNR’s outlook.
  2. Financial Health: Are BNR’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 30 June 2019. 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.