Strabag SE's (VIE:STR) Earnings Grew 27%, Did It Beat Long-Term Trend?
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Strabag SE's (VIE:STR) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
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Did STR beat its long-term earnings growth trend and its industry?
STR's trailing twelve-month earnings (from 31 December 2018) of €354m has jumped 27% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 24%, indicating the rate at which STR is growing has accelerated. How has it been able to do this? Let's see if it is only due to an industry uplift, or if Strabag has seen some company-specific growth.
In terms of returns from investment, Strabag has fallen short of achieving a 20% return on equity (ROE), recording 9.9% instead. Furthermore, its return on assets (ROA) of 2.8% is below the AT Construction industry of 5.9%, indicating Strabag's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Strabag’s debt level, has increased over the past 3 years from 3.7% to 5.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 53% to 37% over the past 5 years.
What does this mean?
Strabag's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Strabag gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Strabag to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for STR’s future growth? Take a look at our free research report of analyst consensus for STR’s outlook.
Financial Health: Are STR’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.
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.
