Today I will examine Orange S.A.'s (ENXTPA:ORA) latest earnings update (30 June 2019) and compare these figures against its performance over the past couple of years, in addition to how the rest of ORA'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.
Could ORA beat the long-term trend and outperform its industry?
ORA's trailing twelve-month earnings (from 30 June 2019) of €1.9b has jumped 10% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.5%, indicating the rate at which ORA is growing has accelerated. How has it been able to do this? Let's take a look at if it is only attributable to an industry uplift, or if Orange has experienced some company-specific growth.
In terms of returns from investment, Orange has fallen short of achieving a 20% return on equity (ROE), recording 7.4% instead. Furthermore, its return on assets (ROA) of 3.1% is below the FR Telecom industry of 6.9%, indicating Orange's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Orange’s debt level, has declined over the past 3 years from 7.6% to 6.6%.
What does this mean?
Though Orange's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Orange gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Orange to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ORA’s future growth? Take a look at our free research report of analyst consensus for ORA’s outlook.
- Financial Health: Are ORA’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.
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