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Has EssilorLuxottica Société anonyme (EPA:EL) Improved Earnings Growth In Recent Times?

Simply Wall St

When EssilorLuxottica Société anonyme (ENXTPA:EL) announced its most recent earnings (30 June 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how EssilorLuxottica Société anonyme 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 EL has performed.

See our latest analysis for EssilorLuxottica Société anonyme

How EL fared against its long-term earnings performance and its industry

EL's trailing twelve-month earnings (from 30 June 2019) of €1.2b has increased by 4.3% 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 8.9%, indicating the rate at which EL is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and whether the whole industry is facing the same headwind.

ENXTPA:EL Income Statement, December 4th 2019

In terms of returns from investment, EssilorLuxottica Société anonyme has fallen short of achieving a 20% return on equity (ROE), recording 4.0% instead. Furthermore, its return on assets (ROA) of 2.7% is below the FR Luxury industry of 5.2%, indicating EssilorLuxottica Société anonyme's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for EssilorLuxottica Société anonyme’s debt level, has declined over the past 3 years from 14% to 4.4%.

What does this mean?

Though EssilorLuxottica Société anonyme's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research EssilorLuxottica Société anonyme to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for EL’s future growth? Take a look at our free research report of analyst consensus for EL’s outlook.
  2. Financial Health: Are EL’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 30 June 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.