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.
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.
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:
- 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.
- 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.
- 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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