Investors with a long-term horizong may find it valuable to assess Tomra Systems ASA’s (OB:TOM) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Tomra Systems is currently performing.
Were TOM’s earnings stronger than its past performances and the industry?
TOM’s trailing twelve-month earnings (from 30 June 2019) of kr799m has jumped 35% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which TOM is growing has accelerated. What’s enabled this growth? Let’s see if it is solely a result of industry tailwinds, or if Tomra Systems has experienced some company-specific growth.
In terms of returns from investment, Tomra Systems has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 7.8% exceeds the NO Commercial Services industry of 5.0%, indicating Tomra Systems has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Tomra Systems’s debt level, has declined over the past 3 years from 18% to 13%.
What does this mean?
Tomra Systems’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Tomra Systems gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Tomra Systems to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TOM’s future growth? Take a look at our free research report of analyst consensus for TOM’s outlook.
- Financial Health: Are TOM’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 30 June 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.