Where Euronext NV’s (EPA:ENX) Earnings Growth Stands Against Its Industry
For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Euronext NV (EPA:ENX) useful as an attempt to give more color around how Euronext is currently performing.
Check out our latest analysis for Euronext
Could ENX beat the long-term trend and outperform its industry?
ENX’s trailing twelve-month earnings (from 30 June 2018) of €257.4m has jumped 30.3% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 15.2%, indicating the rate at which ENX is growing has accelerated. What’s the driver of this growth? Let’s take a look at whether it is solely due to an industry uplift, or if Euronext has experienced some company-specific growth.
In the past couple of years, Euronext grew its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the FR capital markets industry has been growing its average earnings by double-digit 13.9% over the previous twelve months, and 12.4% over the past half a decade. This growth is a median of profitable companies of 8 Capital Markets companies in FR including Idsud, Compagnie Lebon and VIEL & Cie. This means whatever uplift the industry is enjoying, Euronext is able to leverage this to its advantage.
In terms of returns from investment, Euronext has invested its equity funds well leading to a 35.9% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 18.3% exceeds the FR Capital Markets industry of 0.9%, indicating Euronext has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Euronext’s debt level, has declined over the past 3 years from 47.5% to 24.2%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Euronext has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Euronext to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ENX’s future growth? Take a look at our free research report of analyst consensus for ENX’s outlook.
Financial Health: Are ENX’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 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
