Understanding how Geberit AG (VTX:GEBN) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how Geberit is doing by comparing its latest earnings with its long-term trend as well as the performance of its building industry peers.
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Were GEBN's earnings stronger than its past performances and the industry?
GEBN's trailing twelve-month earnings (from 31 March 2019) of CHF614m has jumped 12% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.0%, indicating the rate at which GEBN is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely a result of an industry uplift, or if Geberit has experienced some company-specific growth.
In terms of returns from investment, Geberit has invested its equity funds well leading to a 35% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 18% exceeds the CH Building industry of 7.4%, indicating Geberit has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Geberit’s debt level, has increased over the past 3 years from 17% to 26%.
What does this mean?
Though Geberit's past data is helpful, it is only one aspect of my investment thesis. While Geberit 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 Geberit to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GEBN’s future growth? Take a look at our free research report of analyst consensus for GEBN’s outlook.
- Financial Health: Are GEBN’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.
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