When Aéroports de Paris SA (EPA:ADP) released its most recent earnings update (30 June 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Aéroports de Paris has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see ADP has performed.
Did ADP beat its long-term earnings growth trend and its industry?
ADP's trailing twelve-month earnings (from 30 June 2019) of €661m has jumped 13% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which ADP is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely attributable to an industry uplift, or if Aéroports de Paris has experienced some company-specific growth.
In terms of returns from investment, Aéroports de Paris has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 5.1% is below the FR Infrastructure industry of 5.8%, indicating Aéroports de Paris's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Aéroports de Paris’s debt level, has increased over the past 3 years from 7.8% to 7.8%.
What does this mean?
Though Aéroports de Paris's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Aéroports de Paris gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Aéroports de Paris to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ADP’s future growth? Take a look at our free research report of analyst consensus for ADP’s outlook.
- Financial Health: Are ADP’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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