Understanding Mondi plc's (LSE:MNDI) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Mondi is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Commentary On MNDI's Past Performance
MNDI's trailing twelve-month earnings (from 30 June 2019) of €937m has jumped 40% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which MNDI is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is only attributable to industry tailwinds, or if Mondi has experienced some company-specific growth.
In terms of returns from investment, Mondi has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the GB Forestry industry of 5.1%, indicating Mondi has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Mondi’s debt level, has increased over the past 3 years from 19% to 19%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 61% to 54% over the past 5 years.
What does this mean?
Mondi's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Mondi gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Mondi to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MNDI’s future growth? Take a look at our free research report of analyst consensus for MNDI’s outlook.
- Financial Health: Are MNDI’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 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 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.
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