When ORBIS AG (ETR:OBS) released its most recent earnings update (31 December 2018), 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 ORBIS 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 OBS has performed.
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How OBS fared against its long-term earnings performance and its industry
OBS's trailing twelve-month earnings (from 31 December 2018) of €2.2m has jumped 32% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.1%, indicating the rate at which OBS is growing has accelerated. What's enabled this growth? Let's take a look at if it is only due to an industry uplift, or if ORBIS has seen some company-specific growth.
In terms of returns from investment, ORBIS has fallen short of achieving a 20% return on equity (ROE), recording 9.0% instead. Furthermore, its return on assets (ROA) of 4.5% is below the DE IT industry of 5.3%, indicating ORBIS's are utilized less efficiently. However, its return on capital (ROC), which also accounts for ORBIS’s debt level, has increased over the past 3 years from 6.9% to 10.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 2.1% to 0.3% 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 ORBIS to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for OBS’s future growth? Take a look at our free research report of analyst consensus for OBS’s outlook.
- Financial Health: Are OBS’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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