Examining Eutelsat Communications S.A.’s (EPA:ETL) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess ETL’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
Was ETL’s weak performance lately a part of a long-term decline?
ETL’s trailing twelve-month earnings (from 30 June 2018) of €290m has declined by -18% 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 -0.3%, indicating the rate at which ETL is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Eutelsat Communications has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 5.0% exceeds the FR Media industry of 4.3%, indicating Eutelsat Communications has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Eutelsat Communications’s debt level, has declined over the past 3 years from 9.1% to 8.5%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. In some cases, companies that face an extended period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry growth and disruption. I recommend you continue to research Eutelsat Communications to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ETL’s future growth? Take a look at our free research report of analyst consensus for ETL’s outlook.
- Financial Health: Are ETL’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 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.