In this article, I will take a look at MTU Aero Engines AG’s (XTRA:MTX) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, along with how the rest of MTX’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for MTU Aero Engines
Did MTX’s recent earnings growth beat the long-term trend and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to assess various companies in a uniform manner using the latest information. For MTU Aero Engines, its most recent bottom-line (trailing twelve month) is €378.20M, which, against the prior year’s level, has jumped up by 21.14%. Given that these figures are somewhat myopic, I have determined an annualized five-year value for MTX’s net income, which stands at €221.80M This means generally, MTU Aero Engines has been able to gradually improve its net income over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is only because of an industry uplift, or if MTU Aero Engines has experienced some company-specific growth. In the last couple of years, MTU Aero Engines increased its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the DE aerospace & defense industry has been growing, albeit, at a muted single-digit rate of 5.36% in the past twelve months, and 6.19% over the past five years. This shows that whatever uplift the industry is enjoying, MTU Aero Engines is able to leverage this to its advantage.
What does this mean?
While past data is useful, it 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 recommend you continue to research MTU Aero Engines to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MTX’s future growth? Take a look at our free research report of analyst consensus for MTX’s outlook.
- Financial Health: Is MTX’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 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.