Does Heineken N.V.’s (AMS:HEIA) Recent Track Record Look Strong?

When Heineken N.V.’s (ENXTAM:HEIA) announced its latest earnings (31 December 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Heineken’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not HEIA actually performed well. Below is a quick commentary on how I see HEIA has performed.

View our latest analysis for Heineken

Were HEIA’s earnings stronger than its past performances and the industry?

HEIA’s trailing twelve-month earnings (from 31 December 2019) of €2.2b has jumped 13% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.1%, indicating the rate at which HEIA is growing has accelerated. How has it been able to do this? Let’s take a look at whether it is merely attributable to industry tailwinds, or if Heineken has experienced some company-specific growth.

ENXTAM:HEIA Income Statement March 27th 2020
ENXTAM:HEIA Income Statement March 27th 2020

In terms of returns from investment, Heineken has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 5.6% exceeds the NL Beverage industry of 5.5%, indicating Heineken has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Heineken’s debt level, has increased over the past 3 years from 10% to 11%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Heineken to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for HEIA’s future growth? Take a look at our free research report of analyst consensus for HEIA’s outlook.
  2. Financial Health: Are HEIA’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.
  3. 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 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 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.

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