When Infineon Technologies AG (ETR:IFX) released its most recent earnings update (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Infineon Technologies has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see IFX has performed.
Was IFX weak performance lately part of a long-term decline?
IFX's trailing twelve-month earnings (from 31 March 2019) of €1.1b has declined by -2.9% 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 20%, indicating the rate at which IFX is growing has slowed down. What could be happening here? Let's examine what's going on with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Infineon Technologies has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 9.9% exceeds the DE Semiconductor industry of 7.0%, indicating Infineon Technologies has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Infineon Technologies’s debt level, has increased over the past 3 years from 10% to 15%.
What does this mean?
Infineon Technologies's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I recommend you continue to research Infineon Technologies to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for IFX’s future growth? Take a look at our free research report of analyst consensus for IFX’s outlook.
- Financial Health: Are IFX’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 March 2019. This may not be consistent with full year annual report figures.
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