Assessing Kering SA’s (ENXTPA:KER) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Kering is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its luxury industry peers.
How Well Did KER Perform?
KER’s trailing twelve-month earnings (from 31 December 2019) of €2.2b has declined by -17% 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 27%, indicating the rate at which KER is growing has slowed down. Why could this be happening? Let’s examine what’s going on with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, Kering has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.6% exceeds the FR Luxury industry of 4.8%, indicating Kering has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Kering’s debt level, has increased over the past 3 years from 9.8% to 25%.
What does this mean?
Though Kering’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Kering to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KER’s future growth? Take a look at our free research report of analyst consensus for KER’s outlook.
- Financial Health: Are KER’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 firstname.lastname@example.org. 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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