After looking at Fraport AG's (ETR:FRA) latest earnings announcement (31 December 2018), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
How Did FRA's Recent Performance Stack Up Against Its Past?
FRA's trailing twelve-month earnings (from 31 December 2018) of €474m has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 14%, indicating the rate at which FRA is growing has accelerated. What's the driver of this growth? Let's see if it is solely due to an industry uplift, or if Fraport has experienced some company-specific growth.
In terms of returns from investment, Fraport has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 5.6% is below the DE Infrastructure industry of 5.8%, indicating Fraport's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Fraport’s debt level, has increased over the past 3 years from 6.7% to 7.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 144% to 110% over the past 5 years.
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 suggest you continue to research Fraport to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FRA’s future growth? Take a look at our free research report of analyst consensus for FRA’s outlook.
- Financial Health: Are FRA’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.
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