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Does Evonik Industries AG's (FRA:EVK) Recent Track Record Look Strong?

Simply Wall St

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After looking at Evonik Industries AG's (FRA:EVK) latest earnings announcement (31 December 2018), 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Evonik Industries's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

Check out our latest analysis for Evonik Industries

How Did EVK's Recent Performance Stack Up Against Its Past?

EVK's trailing twelve-month earnings (from 31 December 2018) of €930m has jumped 30% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.5%, indicating the rate at which EVK is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is only because of industry tailwinds, or if Evonik Industries has experienced some company-specific growth.

DB:EVK Income Statement, April 5th 2019

In terms of returns from investment, Evonik Industries has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 5.4% exceeds the DE Chemicals industry of 5.1%, indicating Evonik Industries has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Evonik Industries’s debt level, has declined over the past 3 years from 12% to 9.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 24% to 50% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Evonik Industries gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Evonik Industries to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for EVK’s future growth? Take a look at our free research report of analyst consensus for EVK’s outlook.
  2. Financial Health: Are EVK’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 31 December 2018. 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.