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Should Synergie SE's (EPA:SDG) Recent Earnings Worry You?

Simply Wall St

When Synergie SE (EPA:SDG) announced its most recent earnings (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Synergie has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see SDG has performed.

See our latest analysis for Synergie

How Did SDG's Recent Performance Stack Up Against Its Past?

SDG's trailing twelve-month earnings (from 31 December 2018) of €79m has declined by -0.7% 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 15%, indicating the rate at which SDG is growing has slowed down. Why could this be happening? Let's examine what's occurring with margins and if the whole industry is feeling the heat.

ENXTPA:SDG Income Statement, July 27th 2019

In terms of returns from investment, Synergie has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 7.6% exceeds the FR Professional Services industry of 7.0%, indicating Synergie has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Synergie’s debt level, has declined over the past 3 years from 26% to 22%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 17% over the past 5 years.

What does this mean?

Synergie's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research Synergie to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for SDG’s future growth? Take a look at our free research report of analyst consensus for SDG’s outlook.
  2. Financial Health: Are SDG’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.
  3. 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 editorial-team@simplywallst.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.