Understanding AAK AB (publ.)'s (OM:AAK) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how AAK AB (publ.) is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Commentary On AAK's Past Performance
AAK's trailing twelve-month earnings (from 30 September 2019) of kr1.4b has increased by 9.2% 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 11%, indicating the rate at which AAK is growing has slowed down. To understand what's happening, let’s take a look at what’s occurring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, AAK AB (publ.) has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 7.3% exceeds the SE Food industry of 5.5%, indicating AAK AB (publ.) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for AAK AB (publ.)’s debt level, has increased over the past 3 years from 13% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 70% to 38% over the past 5 years.
What does this mean?
Though AAK AB (publ.)'s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as AAK AB (publ.) gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research AAK AB (publ.) to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AAK’s future growth? Take a look at our free research report of analyst consensus for AAK’s outlook.
- Financial Health: Are AAK’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.
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.
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