Examining DO & CO Aktiengesellschaft’s (WBAG:DOC) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess DOC’s latest performance announced on 30 September 2019 and weight these figures against its longer term trend and industry movements.
Despite a decline, did DOC underperform the long-term trend and the industry?
DOC’s trailing twelve-month earnings (from 30 September 2019) of €25m has declined by -9.0% 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 -7.6%, indicating the rate at which DOC is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, DO & CO has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. Furthermore, its return on assets (ROA) of 4.0% is below the AT Hospitality industry of 4.4%, indicating DO & CO’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for DO & CO’s debt level, has declined over the past 3 years from 13% to 9.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 83% to 109% over the past 5 years.
What does this mean?
Though DO & CO’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that experience an extended period of decline in earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a indicator of a structural change, which makes DO & CO and its peers a riskier investment. I suggest you continue to research DO & CO to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DOC’s future growth? Take a look at our free research report of analyst consensus for DOC’s outlook.
- Financial Health: Are DOC’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.
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.
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