Does Rheinmetall AG's (ETR:RHM) Recent Track Record Look Strong?
Examining Rheinmetall AG's (XTRA:RHM) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess RHM's latest performance announced on 31 December 2019 and compare these figures to its longer term trend and industry movements.
View our latest analysis for Rheinmetall
Commentary On RHM's Past Performance
RHM's trailing twelve-month earnings (from 31 December 2019) of €335m has increased by 9.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 30%, indicating the rate at which RHM is growing has slowed down. To understand what's happening, let's examine what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Rheinmetall has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 5.0% exceeds the DE Industrials industry of 3.6%, indicating Rheinmetall has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Rheinmetall’s debt level, has increased over the past 3 years from 10% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 67% to 35% over the past 5 years.
What does this mean?
Rheinmetall's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Rheinmetall gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Rheinmetall to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for RHM’s future growth? Take a look at our free research report of analyst consensus for RHM’s outlook.
Financial Health: Are RHM’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 31 December 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 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.
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