With 50% Earnings Growth, Did Viña San Pedro Tarapacá S.A. (SNSE:VSPT) Outperform The Industry?

After looking at Viña San Pedro Tarapacá S.A.'s (SNSE:VSPT) latest earnings announcement (31 December 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

See our latest analysis for Viña San Pedro Tarapacá

Did VSPT's recent earnings growth beat the long-term trend and the industry?

VSPT's trailing twelve-month earnings (from 31 December 2019) of CL$22b has jumped 50% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -7.6%, indicating the rate at which VSPT is growing has accelerated. How has it been able to do this? Let's take a look at whether it is merely owing to industry tailwinds, or if Viña San Pedro Tarapacá has seen some company-specific growth.

In terms of returns from investment, Viña San Pedro Tarapacá has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. However, its return on assets (ROA) of 6.3% exceeds the CL Beverage industry of 6.1%, indicating Viña San Pedro Tarapacá has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Viña San Pedro Tarapacá’s debt level, has declined over the past 3 years from 15% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 17% to 20% over the past 5 years.

What does this mean?

Viña San Pedro Tarapacá'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 Viña San Pedro Tarapacá to get a better picture of the stock by looking at:

1. Financial Health: Are VSPT’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.
2. Valuation: What is VSPT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether VSPT is currently mispriced by the market.
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 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 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.

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