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Assessing STMicroelectronics N.V.'s (EPA:STM) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess STM's latest performance announced on 30 March 2019 and evaluate these figures to its historical trend and industry movements.
Commentary On STM's Past Performance
STM's trailing twelve-month earnings (from 30 March 2019) of US$1.2b has jumped 32% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 63%, indicating the rate at which STM is growing has slowed down. What could be happening here? Well, let's examine what's occurring with margins and if the whole industry is feeling the heat.
In terms of returns from investment, STMicroelectronics has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 11% exceeds the FR Semiconductor industry of 7.3%, indicating STMicroelectronics has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for STMicroelectronics’s debt level, has increased over the past 3 years from 1.9% to 14%.
What does this mean?
Though STMicroelectronics'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? You should continue to research STMicroelectronics to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STM’s future growth? Take a look at our free research report of analyst consensus for STM’s outlook.
- Financial Health: Are STM’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 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 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.