Investors with a long-term horizong may find it valuable to assess Sogeclair SA’s (EPA:SOG) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Sogeclair is currently performing.
How Did SOG’s Recent Performance Stack Up Against Its Past?
SOG’s trailing twelve-month earnings (from 30 June 2018) of €4.8m has declined by -17% 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 -2.9%, indicating the rate at which SOG is growing has slowed down. Why is this? Well, let’s look at what’s going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Sogeclair has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 3.5% is below the FR Aerospace & Defense industry of 4.0%, indicating Sogeclair’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Sogeclair’s debt level, has increased over the past 3 years from 9.0% to 11%.
What does this mean?
Though Sogeclair’s past data is helpful, it is only one aspect of my investment thesis. Generally companies that experience a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes Sogeclair and its peers a riskier investment. I recommend you continue to research Sogeclair to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SOG’s future growth? Take a look at our free research report of analyst consensus for SOG’s outlook.
- Financial Health: Are SOG’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 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.