After reading Fiducial Real Estate SA’s (ENXTPA:ORIA) most recent earnings announcement (30 September 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
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Were ORIA’s earnings stronger than its past performances and the industry?
ORIA’s trailing twelve-month earnings (from 30 September 2019) of €30m has jumped 15% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.4%, indicating the rate at which ORIA is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely because of industry tailwinds, or if Fiducial Real Estate has seen some company-specific growth.
In terms of returns from investment, Fiducial Real Estate has fallen short of achieving a 20% return on equity (ROE), recording 8.3% instead. However, its return on assets (ROA) of 5.2% exceeds the FR Real Estate industry of 2.9%, indicating Fiducial Real Estate has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Fiducial Real Estate’s debt level, has increased over the past 3 years from 5.1% to 5.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 109% to 70% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Fiducial Real Estate has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Fiducial Real Estate to get a more holistic view of the stock by looking at:
- Financial Health: Are ORIA’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.
- Valuation: What is ORIA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ORIA is currently mispriced by the market.
- 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.
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