Has Capgemini SE (EPA:CAP) Improved Earnings Growth In Recent Times?
When Capgemini SE (ENXTPA:CAP) released its most recent earnings update (30 June 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Capgemini has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see CAP has performed.
See our latest analysis for Capgemini
Could CAP beat the long-term trend and outperform its industry?
CAP's trailing twelve-month earnings (from 30 June 2019) of €804m has increased by 5.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.0%, indicating the rate at which CAP is growing has accelerated. What's the driver of this growth? Let's see whether it is merely owing to industry tailwinds, or if Capgemini has seen some company-specific growth.
In terms of returns from investment, Capgemini has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 4.7% exceeds the FR IT industry of 4.3%, indicating Capgemini has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Capgemini’s debt level, has increased over the past 3 years from 11% to 11%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Capgemini has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Capgemini to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CAP’s future growth? Take a look at our free research report of analyst consensus for CAP’s outlook.
Financial Health: Are CAP’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.
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.
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