Examining how Poolia AB (publ) (STO:POOL B) is performing as a company requires looking at more than just a years' earnings. Below, I will run you through a simple sense check to build perspective on how Poolia is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its professional services industry peers.
Commentary On POOL B's Past Performance
POOL B's trailing twelve-month earnings (from 31 December 2018) of kr13m has declined by -0.5% 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 14%, indicating the rate at which POOL B is growing has slowed down. Why is this? Well, let's look at what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Poolia has fallen short of achieving a 20% return on equity (ROE), recording 8.7% instead. Furthermore, its return on assets (ROA) of 2.3% is below the SE Professional Services industry of 7.0%, indicating Poolia's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Poolia’s debt level, has declined over the past 3 years from 21% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 16% to 28% over the past 5 years.
What does this mean?
Though Poolia's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research Poolia to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for POOL B’s future growth? Take a look at our free research report of analyst consensus for POOL B’s outlook.
- Financial Health: Are POOL B’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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