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Where Chr. Hansen Holding A/S (CPH:CHR) Stands In Terms Of Earnings Growth Against Its Industry

Simply Wall St

When Chr. Hansen Holding A/S (CPH:CHR) announced its most recent earnings (31 May 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Chr. Hansen Holding performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see CHR has performed.

Check out our latest analysis for Chr. Hansen Holding

Did CHR's recent earnings growth beat the long-term trend and the industry?

CHR's trailing twelve-month earnings (from 31 May 2019) of €246m has increased by 8.6% 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 12%, indicating the rate at which CHR is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the whole industry is facing the same headwind.

CPSE:CHR Income Statement, August 12th 2019

In terms of returns from investment, Chr. Hansen Holding has invested its equity funds well leading to a 29% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the DK Chemicals industry of 5.4%, indicating Chr. Hansen Holding has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Chr. Hansen Holding’s debt level, has increased over the past 3 years from 19% to 21%.

What does this mean?

Though Chr. Hansen Holding'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? You should continue to research Chr. Hansen Holding to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CHR’s future growth? Take a look at our free research report of analyst consensus for CHR’s outlook.
  2. Financial Health: Are CHR’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 May 2019. 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.