After looking at Lifco AB (publ)'s (STO:LIFCO B) latest earnings update (30 June 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. 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 an important aspect. In this article I briefly touch on my key findings.
Commentary On LIFCO B's Past Performance
LIFCO B's trailing twelve-month earnings (from 30 June 2019) of kr1.5b has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 20%, indicating the rate at which LIFCO B is growing has accelerated. How has it been able to do this? Let's see whether it is only a result of industry tailwinds, or if Lifco has seen some company-specific growth.
In terms of returns from investment, Lifco has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.3% exceeds the SE Industrials industry of 3.1%, indicating Lifco has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Lifco’s debt level, has increased over the past 3 years from 20% to 22%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 89% to 70% 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? You should continue to research Lifco to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LIFCO B’s future growth? Take a look at our free research report of analyst consensus for LIFCO B’s outlook.
- Financial Health: Are LIFCO B’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 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 email@example.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.