When Sartorius Stedim Biotech SA (EPA:DIM) announced its most recent earnings (30 June 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Sartorius Stedim Biotech performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see DIM has performed.
Were DIM’s earnings stronger than its past performances and the industry?
DIM’s trailing twelve-month earnings (from 30 June 2018) of €173m has jumped 10% 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 22%, indicating the rate at which DIM is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Sartorius Stedim Biotech has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 12% exceeds the FR Life Sciences industry of 5.7%, indicating Sartorius Stedim Biotech has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sartorius Stedim Biotech’s debt level, has increased over the past 3 years from 18% to 23%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 37% to 20% 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 Sartorius Stedim Biotech gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Sartorius Stedim Biotech to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DIM’s future growth? Take a look at our free research report of analyst consensus for DIM’s outlook.
- Financial Health: Are DIM’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.