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Examining Heineken N.V.'s (AMS:HEIA) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess HEIA's latest performance announced on 31 December 2018 and weigh these figures against its longer term trend and industry movements.
How Well Did HEIA Perform?
HEIA's trailing twelve-month earnings (from 31 December 2018) of €1.9b has declined by -1.7% 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 6.2%, indicating the rate at which HEIA is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Heineken has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 5.5% exceeds the NL Beverage industry of 5.5%, indicating Heineken has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Heineken’s debt level, has increased over the past 3 years from 9.5% to 10%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 99% to 96% over the past 5 years.
What does this mean?
Heineken'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 unpredictable earnings, can have many factors influencing its business. I suggest you continue to research Heineken to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HEIA’s future growth? Take a look at our free research report of analyst consensus for HEIA’s outlook.
- Financial Health: Are HEIA’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 firstname.lastname@example.org. 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.