In this commentary, I will examine Fraport AG's (XTRA:FRA) latest earnings update (30 September 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the infrastructure industry performed. As an investor, I find it beneficial to assess FRA’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Commentary On FRA's Past Performance
FRA's trailing twelve-month earnings (from 30 September 2019) of €508m has jumped 39% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 16%, indicating the rate at which FRA is growing has accelerated. What's enabled this growth? Let's take a look at if it is merely a result of industry tailwinds, or if Fraport has seen some company-specific growth.
In terms of returns from investment, Fraport has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 5.3% is below the DE Infrastructure industry of 6.2%, indicating Fraport's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Fraport’s debt level, has declined over the past 3 years from 6.5% to 6.2%.
What does this mean?
Though Fraport'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 Fraport to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FRA’s future growth? Take a look at our free research report of analyst consensus for FRA’s outlook.
- Financial Health: Are FRA’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 September 2019. This may not be consistent with full year annual report figures.
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