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Does Siemens Aktiengesellschaft's (ETR:SIE) Recent Track Record Look Strong?

Simply Wall St

After looking at Siemens Aktiengesellschaft's (XTRA:SIE) latest earnings announcement (31 December 2019), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

Check out our latest analysis for Siemens

Could SIE beat the long-term trend and outperform its industry?

SIE's trailing twelve-month earnings (from 31 December 2019) of €5.2b has jumped 16% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.3%, indicating the rate at which SIE is growing has accelerated. How has it been able to do this? Let's take a look at if it is only owing to industry tailwinds, or if Siemens has seen some company-specific growth.

XTRA:SIE Income Statement March 30th 2020

In terms of returns from investment, Siemens has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 2.8% is below the DE Industrials industry of 3.6%, indicating Siemens's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Siemens’s debt level, has declined over the past 3 years from 9.0% to 6.3%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 73% to 77% over the past 5 years.

What does this mean?

Though Siemens's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Siemens gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Siemens to get a more holistic view of the stock by looking at:

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

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. Thank you for reading.