When Deutsche Post AG (XTRA:DPW) announced its most recent earnings (30 September 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Deutsche Post performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see DPW has performed.
How DPW fared against its long-term earnings performance and its industry
DPW's trailing twelve-month earnings (from 30 September 2019) of €2.6b has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.2%, indicating the rate at which DPW is growing has accelerated. What's enabled this growth? Let's take a look at if it is merely owing to an industry uplift, or if Deutsche Post has experienced some company-specific growth.
In terms of returns from investment, Deutsche Post has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 6.1% exceeds the DE Logistics industry of 3.8%, indicating Deutsche Post has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Deutsche Post’s debt level, has declined over the past 3 years from 13% to 8.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 59% to 59% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Deutsche Post to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DPW’s future growth? Take a look at our free research report of analyst consensus for DPW’s outlook.
- Financial Health: Are DPW’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 September 2019. This may not be consistent with full year annual report figures.
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.
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