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Examining how Sartorius Aktiengesellschaft (FRA:SRT) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Sartorius is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its medical equipment industry peers.
Did SRT's recent earnings growth beat the long-term trend and the industry?
SRT's trailing twelve-month earnings (from 31 March 2019) of €153m has jumped 33% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 23%, indicating the rate at which SRT is growing has accelerated. What's the driver of this growth? Let's take a look at if it is solely a result of industry tailwinds, or if Sartorius has experienced some company-specific growth.
In terms of returns from investment, Sartorius has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. However, its return on assets (ROA) of 6.3% is below the DE Medical Equipment industry of 6.7%, indicating Sartorius's are utilized less efficiently. Furthermore, its return on capital (ROC), which also accounts for Sartorius’s debt level, has declined over the past 3 years from 18% to 15%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 84% to 104% over the past 5 years.
What does this mean?
Though Sartorius's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Sartorius to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SRT’s future growth? Take a look at our free research report of analyst consensus for SRT’s outlook.
- Financial Health: Are SRT’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 March 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 email@example.com. 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.