Stock Analysis

    Want To Invest In OSRAM Licht AG (ETR:OSR)? Here's How It Performed Lately

    Source: Shutterstock

    Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess OSRAM Licht AG's (XTRA:OSR) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for OSRAM Licht

    Advertisement

    Was OSR's recent earnings decline worse than the long-term trend and the industry?

    I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to assess various companies on a more comparable basis, using new information. For OSRAM Licht, its latest trailing-twelve-month earnings is €248.00M, which, against the prior year's figure, has plunged by -19.48%. Since these values are relatively short-term, I have estimated an annualized five-year figure for OSRAM Licht's earnings, which stands at €184.51M This means that despite the fact that earnings growth was negative against the prior year, over a longer period of time, OSRAM Licht's profits have been rising on average.

    XTRA:OSR Income Statement Mar 26th 18
    XTRA:OSR Income Statement Mar 26th 18
    How has it been able to do this? Well, let’s take a look at whether it is merely owing to industry tailwinds, or if OSRAM Licht has seen some company-specific growth. In the last couple of years, OSRAM Licht increased bottom-line, while its top-line declined, by efficiently managing its costs. This resulted in to a margin expansion and profitability over time. Looking at growth from a sector-level, the DE electrical industry has been growing its average earnings by double-digit 22.54% in the previous year, and 13.02% over the past five. This means any uplift the industry is benefiting from, OSRAM Licht has not been able to reap as much as its average peer.

    What does this mean?

    Though OSRAM Licht's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research OSRAM Licht to get a better picture of the stock by looking at:

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

    New: Manage All Your Stock Portfolios in One Place

    We've created the ultimate portfolio companion for stock investors, and it's free.

    • Connect an unlimited number of Portfolios and see your total in one currency
    • Be alerted to new Warning Signs or Risks via email or mobile
    • Track the Fair Value of your stocks

    Try a Demo Portfolio for Free

    Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

    Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.