Has Hornbach Holding AG & Co. KGaA's (FRA:HBH) Earnings Momentum Changed Recently?

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Assessing Hornbach Holding AG & Co. KGaA's (FRA:HBH) 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 HBH's recent performance announced on 31 May 2019 and evaluate these figures to its long-term trend and industry movements.

View our latest analysis for Hornbach Holding KGaA

Commentary On HBH's Past Performance

HBH's trailing twelve-month earnings (from 31 May 2019) of €73m has declined by -1.6% 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 -4.1%, indicating the rate at which HBH is growing has slowed down. Why is this? Let's examine what's transpiring with margins and whether the entire industry is facing the same headwind.

DB:HBH Income Statement, July 12th 2019
DB:HBH Income Statement, July 12th 2019

In terms of returns from investment, Hornbach Holding KGaA has fallen short of achieving a 20% return on equity (ROE), recording 5.4% instead. However, its return on assets (ROA) of 2.7% exceeds the DE Specialty Retail industry of 2.3%, indicating Hornbach Holding KGaA has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Hornbach Holding KGaA’s debt level, has declined over the past 3 years from 7.1% to 5.1%.

What does this mean?

Though Hornbach Holding KGaA's past data is helpful, it is only one aspect of my investment thesis. Generally companies that experience a prolonged period of reduction in earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry disruption and expansion. I recommend you continue to research Hornbach Holding KGaA to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for HBH’s future growth? Take a look at our free research report of analyst consensus for HBH’s outlook.

  2. Financial Health: Are HBH’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.

  3. 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 May 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 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. Thank you for reading.