In this article, I will take a look at Etteplan Oyj's (HLSE:ETTE) most recent earnings update (30 September 2019) and compare these latest figures against its performance over the past few years, along with how the rest of ETTE's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Did ETTE beat its long-term earnings growth trend and its industry?
ETTE's trailing twelve-month earnings (from 30 September 2019) of €18m has jumped 25% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 26%, indicating the rate at which ETTE is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Etteplan Oyj has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.9% exceeds the FI Professional Services industry of 5.6%, indicating Etteplan Oyj has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Etteplan Oyj’s debt level, has increased over the past 3 years from 11% to 19%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 86% to 60% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Etteplan Oyj gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Etteplan Oyj to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ETTE’s future growth? Take a look at our free research report of analyst consensus for ETTE’s outlook.
- Financial Health: Are ETTE’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 September 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.