When Beiersdorf Aktiengesellschaft (XTRA:BEI) released its most recent earnings update (31 December 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Beiersdorf’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not BEI actually performed well. Below is a quick commentary on how I see BEI has performed.
Did BEI perform better than its track record and industry?
BEI’s trailing twelve-month earnings (from 31 December 2019) of €718m has declined by -1.4% 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 4.8%, indicating the rate at which BEI is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, Beiersdorf has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.9% exceeds the DE Personal Products industry of 5.6%, indicating Beiersdorf has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Beiersdorf’s debt level, has declined over the past 3 years from 19% to 16%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 1.4% to 4.6% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research Beiersdorf to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BEI’s future growth? Take a look at our free research report of analyst consensus for BEI’s outlook.
- Financial Health: Are BEI’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 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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