Where Julius Baer Group Ltd (SWX:BAER) Stands In Terms Of Earnings Growth Against Its Industry

Simply Wall St June 13, 2018

Assessing Julius Baer Group Ltd’s (SWX:BAER) 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 BAER’s recent performance announced on 31 December 2017 and evaluate these figures to its long-term trend and industry movements. View out our latest analysis for Julius Baer Group

How BAER fared against its long-term earnings performance and its industry

BAER’s trailing twelve-month earnings (from 31 December 2017) of CHF704.80m has jumped 13.79% 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 16.64%, indicating the rate at which BAER is growing has slowed down. To understand what’s happening, let’s look at what’s going on with margins and if the whole industry is feeling the heat.

Over the last couple of years, revenue growth has failed to keep up which implies that Julius Baer Group’s bottom line has been driven by unsustainable cost-cutting. Scanning growth from a sector-level, the CH capital markets industry has been growing its average earnings by double-digit 12.80% in the previous twelve months, and 13.11% over the past five. This means that whatever tailwind the industry is enjoying, Julius Baer Group is capable of amplifying this to its advantage.

SWX:BAER Income Statement June 13th 18
SWX:BAER Income Statement June 13th 18
In terms of returns from investment, Julius Baer Group has not invested its equity funds well, leading to a 12.23% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 0.72% is below the CH Capital Markets industry of 1.89%, indicating Julius Baer Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Julius Baer Group’s debt level, has increased over the past 3 years from 2.83% to 4.61%.

What does this mean?

Julius Baer Group’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 Julius Baer Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Julius Baer Group to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BAER’s future growth? Take a look at our free research report of analyst consensus for BAER’s outlook.
  2. Financial Health: Is BAER’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.
  3. 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.