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Examining Lonza Group Ltd’s (VTX:LONN) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess LONN’s latest performance announced on 31 December 2018 and weight these figures against its longer term trend and industry movements.
View our latest analysis for Lonza Group
How Did LONN’s Recent Performance Stack Up Against Its Past?
LONN’s trailing twelve-month earnings (from 31 December 2018) of CHF655m 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 36%, indicating the rate at which LONN is growing has slowed down. Why could this be happening? Let’s examine what’s transpiring with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Lonza Group has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 5.5% is below the CH Life Sciences industry of 7.5%, indicating Lonza Group’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Lonza Group’s debt level, has declined over the past 3 years from 11% to 8.8%.
What does this mean?
Though Lonza Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Lonza Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LONN’s future growth? Take a look at our free research report of analyst consensus for LONN’s outlook.
- Financial Health: Are LONN’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 2018. 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 editorial-team@simplywallst.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. Thank you for reading.