When Lectra SA’s (ENXTPA:LSS) 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 Lectra’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not LSS actually performed well. Below is a quick commentary on how I see LSS has performed.
Check out our latest analysis for Lectra
Did LSS perform better than its track record and industry?
LSS’s trailing twelve-month earnings (from 31 December 2019) of €29m has increased by 2.0% 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 9.9%, indicating the rate at which LSS is growing has slowed down. To understand what’s happening, let’s take a look at what’s transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Lectra has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 8.6% exceeds the FR Software industry of 4.4%, indicating Lectra has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Lectra’s debt level, has declined over the past 3 years from 26% to 19%.
What does this mean?
Lectra’s track record can be a valuable insight into its earnings performance, but it certainly 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 suggest you continue to research Lectra to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LSS’s future growth? Take a look at our free research report of analyst consensus for LSS’s outlook.
- Financial Health: Are LSS’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.
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