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Today I will take a look at SAF-Holland S.A.’s (FRA:SFQ) most recent earnings update (31 March 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the auto components industry performed. As an investor, I find it beneficial to assess SFQ’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Could SFQ beat the long-term trend and outperform its industry?
SFQ’s trailing twelve-month earnings (from 31 March 2019) of €49m has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.2%, indicating the rate at which SFQ is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is only attributable to an industry uplift, or if SAF-Holland has experienced some company-specific growth.
In terms of returns from investment, SAF-Holland has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 5.5% exceeds the DE Auto Components industry of 4.5%, indicating SAF-Holland has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for SAF-Holland’s debt level, has declined over the past 3 years from 11% to 9.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 68% to 110% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as SAF-Holland gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research SAF-Holland to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SFQ’s future growth? Take a look at our free research report of analyst consensus for SFQ’s outlook.
- Financial Health: Are SFQ’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 March 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 email@example.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.