FRoSTA Aktiengesellschaft (FRA:NLM): Does The -14% Earnings Drop Reflect A Longer Term Trend?
Examining FRoSTA Aktiengesellschaft's (FRA:NLM) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess NLM's latest performance announced on 31 December 2018 and compare these figures to its longer term trend and industry movements.
See our latest analysis for FRoSTA
Was NLM's weak performance lately a part of a long-term decline?
NLM's trailing twelve-month earnings (from 31 December 2018) of €20m has declined by -14% 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 11%, indicating the rate at which NLM is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, FRoSTA has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.3% exceeds the DE Food industry of 5.2%, indicating FRoSTA has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for FRoSTA’s debt level, has increased over the past 3 years from 15% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 33% to 25% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. You should continue to research FRoSTA to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for NLM’s future growth? Take a look at our free research report of analyst consensus for NLM’s outlook.
Financial Health: Are NLM’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 31 December 2018. This may not be consistent with full year annual report figures.
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.
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. Thank you for reading.
