In this article, I will take a look at Pfeiffer Vacuum Technology AG's (XTRA:PFV) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, along with how the rest of PFV's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Was PFV weak performance lately part of a long-term decline?
PFV's trailing twelve-month earnings (from 30 June 2019) of €58m has declined by -9.7% 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 15%, indicating the rate at which PFV is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Pfeiffer Vacuum Technology has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 9.3% exceeds the DE Machinery industry of 5.0%, indicating Pfeiffer Vacuum Technology has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Pfeiffer Vacuum Technology’s debt level, has declined over the past 3 years from 17% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 16% to 16% over the past 5 years.
What does this mean?
Though Pfeiffer Vacuum Technology's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Pfeiffer Vacuum Technology to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PFV’s future growth? Take a look at our free research report of analyst consensus for PFV’s outlook.
- Financial Health: Are PFV’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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