Should Malteries Franco-Belges Société Anonyme's (EPA:MALT) Recent Earnings Decline Worry You?

When Malteries Franco-Belges Société Anonyme (ENXTPA:MALT) announced its most recent earnings (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 Malteries Franco-Belges Société Anonyme 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 MALT has performed.

Check out our latest analysis for Malteries Franco-Belges Société Anonyme

Was MALT's weak performance lately a part of a long-term decline?

MALT's trailing twelve-month earnings (from 30 June 2019) of €19m has declined by -3.6% 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 12%, indicating the rate at which MALT is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is feeling the heat.

ENXTPA:MALT Income Statement, December 7th 2019
ENXTPA:MALT Income Statement, December 7th 2019

In terms of returns from investment, Malteries Franco-Belges Société Anonyme has fallen short of achieving a 20% return on equity (ROE), recording 9.1% instead. However, its return on assets (ROA) of 8.0% exceeds the FR Food industry of 3.7%, indicating Malteries Franco-Belges Société Anonyme has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Malteries Franco-Belges Société Anonyme’s debt level, has declined over the past 3 years from 4.4% to 3.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.04% to 2.2% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Malteries Franco-Belges Société Anonyme to get a better picture of the stock by looking at:

  1. Financial Health: Are MALT’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.

  2. Valuation: What is MALT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MALT is currently mispriced by the market.

  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 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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