Today I will examine AF Gruppen ASA's (OB:AFG) 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 AFG'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 AFG fared against its long-term earnings performance and its industry
AFG's trailing twelve-month earnings (from 30 September 2019) of kr899m has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.8%, indicating the rate at which AFG is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is solely a result of an industry uplift, or if AF Gruppen has seen some company-specific growth.
In terms of returns from investment, AF Gruppen has invested its equity funds well leading to a 48% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.8% exceeds the NO Construction industry of 4.1%, indicating AF Gruppen has used its assets more efficiently. However, its return on capital (ROC), which also accounts for AF Gruppen’s debt level, has declined over the past 3 years from 42% to 29%.
What does this mean?
AF Gruppen's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. 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 AF Gruppen to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AFG’s future growth? Take a look at our free research report of analyst consensus for AFG’s outlook.
- Financial Health: Are AFG’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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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