Today I will examine Duni AB (publ)'s (OM:DUNI) latest earnings update (30 September 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of DUNI'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.
How Well Did DUNI Perform?
DUNI's trailing twelve-month earnings (from 30 September 2019) of kr255m has declined by -17% 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 -4.4%, indicating the rate at which DUNI is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Duni has fallen short of achieving a 20% return on equity (ROE), recording 9.6% instead. Furthermore, its return on assets (ROA) of 4.4% is below the SE Consumer Durables industry of 5.9%, indicating Duni's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Duni’s debt level, has declined over the past 3 years from 13% to 7.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 48% to 64% over the past 5 years.
What does this mean?
Though Duni's past data is helpful, it is only one aspect of my investment thesis. Generally companies that endure a drawn out period of diminishing earnings are going through some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a signal of a structural shift, which makes Duni and its peers a riskier investment. You should continue to research Duni to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DUNI’s future growth? Take a look at our free research report of analyst consensus for DUNI’s outlook.
- Financial Health: Are DUNI’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 September 2019. This may not be consistent with full year annual report figures.
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