Want To Invest In Knorr-Bremse Aktiengesellschaft (ETR:KBX)? Here's How It Performed Lately
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When Knorr-Bremse Aktiengesellschaft (ETR:KBX) released its most recent earnings update (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Knorr-Bremse's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not KBX actually performed well. Below is a quick commentary on how I see KBX has performed.
Check out our latest analysis for Knorr-Bremse
Did KBX beat its long-term earnings growth trend and its industry?
KBX's trailing twelve-month earnings (from 31 December 2018) of €593m has jumped 11% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.6%, indicating the rate at which KBX is growing has accelerated. What's the driver of this growth? Let's take a look at if it is solely due to industry tailwinds, or if Knorr-Bremse has experienced some company-specific growth.
In terms of returns from investment, Knorr-Bremse has invested its equity funds well leading to a 39% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 10% exceeds the DE Machinery industry of 5.3%, indicating Knorr-Bremse has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Knorr-Bremse’s debt level, has declined over the past 3 years from 46% to 25%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 12% to 94% over the past 5 years.
What does this mean?
Knorr-Bremse's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. 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 Knorr-Bremse to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for KBX’s future growth? Take a look at our free research report of analyst consensus for KBX’s outlook.
Financial Health: Are KBX’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 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.
