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When Reno De Medici S.p.A. (BIT:RM) announced its most recent earnings (31 March 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 Reno De Medici 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 RM has performed.
Was RM's weak performance lately a part of a long-term decline?
RM's trailing twelve-month earnings (from 31 March 2019) of €22m has declined by -11% 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 21%, indicating the rate at which RM is growing has slowed down. What could be happening here? Well, let's look at what's transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Reno De Medici has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 4.5% is below the IT Packaging industry of 5.7%, indicating Reno De Medici's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Reno De Medici’s debt level, has increased over the past 3 years from 7.2% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 53% to 50% 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 volatile earnings, can have many factors affecting its business. I recommend you continue to research Reno De Medici to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RM’s future growth? Take a look at our free research report of analyst consensus for RM’s outlook.
- Financial Health: Are RM’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 March 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 email@example.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.