Examining edding AG’s (FRA:EDD3) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess EDD3’s latest performance announced on 31 December 2017 and compare these figures to its longer term trend and industry movements.
How Did EDD3’s Recent Performance Stack Up Against Its Past?EDD3’s trailing twelve-month earnings (from 31 December 2017) of €7.8m has increased by 7.7% 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 14.5%, indicating the rate at which EDD3 is growing has slowed down. To understand what’s happening, let’s look at what’s occurring with margins and if the whole industry is experiencing the hit as well.
In the last few years, revenue growth has failed to keep up which implies that edding’s bottom line has been propelled by unmaintainable cost-cutting. Scanning growth from a sector-level, the DE commercial services industry has been growing, albeit, at a muted single-digit rate of 7.7% over the previous twelve months, and 9.6% over the past five. This growth is a median of profitable companies of 6 Commercial Services companies in DE including Collection House, CEWE Stiftung KGaA and Securitas.In terms of returns from investment, edding has fallen short of achieving a 20% return on equity (ROE), recording 13.1% instead. However, its return on assets (ROA) of 8.2% exceeds the DE Commercial Services industry of 6.3%, indicating edding has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for edding’s debt level, has declined over the past 3 years from 18.9% to 15.2%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While edding has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research edding to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EDD3’s future growth? Take a look at our free research report of analyst consensus for EDD3’s outlook.
- Financial Health: Are EDD3’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 December 2017. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.