Today I will take a look at Holmen Aktiebolag (publ.)’s (STO:HOLM B) most recent earnings update (31 December 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the forestry industry performed. As an investor, I find it beneficial to assess HOLM B’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
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How HOLM B fared against its long-term earnings performance and its industry
HOLM B’s trailing twelve-month earnings (from 31 December 2018) of kr2.3b has jumped 36% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 22%, indicating the rate at which HOLM B is growing has accelerated. How has it been able to do this? Let’s take a look at whether it is merely because of an industry uplift, or if Holmen Aktiebolag (publ.) has seen some company-specific growth.
In terms of returns from investment, Holmen Aktiebolag (publ.) has fallen short of achieving a 20% return on equity (ROE), recording 9.7% instead. However, its return on assets (ROA) of 6.2% exceeds the SE Forestry industry of 6.1%, indicating Holmen Aktiebolag (publ.) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Holmen Aktiebolag (publ.)’s debt level, has increased over the past 3 years from 3.6% to 6.4%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 30% to 15% over the past 5 years.
What does this mean?
Holmen Aktiebolag (publ.)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Holmen Aktiebolag (publ.) gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Holmen Aktiebolag (publ.) to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HOLM B’s future growth? Take a look at our free research report of analyst consensus for HOLM B’s outlook.
- Financial Health: Are HOLM 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 31 December 2018. This may not be consistent with full year annual report figures.
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