After looking at Nolato AB (publ)'s (STO:NOLA B) latest earnings announcement (30 June 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Nolato's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Despite a decline, did NOLA B underperform the long-term trend and the industry?
NOLA B's trailing twelve-month earnings (from 30 June 2019) of kr623m has declined by -16% 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 17%, indicating the rate at which NOLA B is growing has slowed down. What could be happening here? Well, let's look at what's going on with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Nolato 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 11% exceeds the SE Industrials industry of 3.1%, indicating Nolato has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Nolato’s debt level, has declined over the past 3 years from 25% to 22%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 5.3% 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 impacting its business. I suggest you continue to research Nolato to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NOLA B’s future growth? Take a look at our free research report of analyst consensus for NOLA B’s outlook.
- Financial Health: Are NOLA B’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.
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.