Does Bouygues SA's (EPA:EN) -9.7% Earnings Drop Reflect A Longer Term Trend?
Examining Bouygues SA's (ENXTPA:EN) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess EN's latest performance announced on 31 December 2019 and compare these figures to its longer term trend and industry movements.
Check out our latest analysis for Bouygues
Was EN weak performance lately part of a long-term decline?
EN's trailing twelve-month earnings (from 31 December 2019) of €1.2b has declined by -9.7% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 24%, indicating the rate at which EN is growing has slowed down. Why could this be happening? Let's examine what's transpiring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Bouygues has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 3.2% exceeds the FR Construction industry of 3.1%, indicating Bouygues has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Bouygues’s debt level, has increased over the past 3 years from 4.6% to 8.5%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 78% to 49% over the past 5 years.
What does this mean?
Though Bouygues's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research Bouygues to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for EN’s future growth? Take a look at our free research report of analyst consensus for EN’s outlook.
Financial Health: Are EN’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 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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