Measuring Proximus PLC’s (EBR:PROX) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess PROX’s recent performance announced on 31 December 2018 and compare these figures to its historical trend and industry movements.
Did PROX perform worse than its track record and industry?
PROX’s trailing twelve-month earnings (from 31 December 2018) of €508m has declined by -2.7% 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 -5.3%, indicating the rate at which PROX is growing has slowed down. Why is this? Let’s examine what’s going on with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Proximus has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 6.5% exceeds the BE Telecom industry of 4.7%, indicating Proximus has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Proximus’s debt level, has declined over the past 3 years from 15% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 75% to 79% over the past 5 years.
What does this mean?
Proximus’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that endure a prolonged period of diminishing earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and growth. I recommend you continue to research Proximus to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PROX’s future growth? Take a look at our free research report of analyst consensus for PROX’s outlook.
- Financial Health: Are PROX’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.