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.
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.
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:
- 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.
- 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.
- 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.
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