Was RATH Aktiengesellschaft's (VIE:RAT) Earnings Growth Better Than The Industry's?

Simply Wall St

After reading RATH Aktiengesellschaft's (WBAG:RAT) most recent earnings announcement (30 June 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

See our latest analysis for RATH

Were RAT's earnings stronger than its past performances and the industry?

RAT's trailing twelve-month earnings (from 30 June 2019) of €6.3m has jumped 26% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 16%, indicating the rate at which RAT is growing has accelerated. How has it been able to do this? Let's take a look at whether it is solely owing to an industry uplift, or if RATH has seen some company-specific growth.

WBAG:RAT Income Statement, October 9th 2019

In terms of returns from investment, RATH has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.3% exceeds the AT Basic Materials industry of 6.0%, indicating RATH has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for RATH’s debt level, has declined over the past 3 years from 11% to 9.6%.

What does this mean?

Though RATH's past data is helpful, it is only one aspect of my investment thesis. While RATH has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research RATH to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for RAT’s future growth? Take a look at our free research report of analyst consensus for RAT’s outlook.
  2. Financial Health: Are RAT’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 30 June 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.