Today I will examine Befesa SA’s (FRA:BFSA) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of BFSA’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Did BFSA’s recent performance beat its trend and industry?BFSA recently turned a profit of €33.44m (most recent trailing twelve-months) compared to its average loss of -€19.36m over the past five years.
In the past few years, Befesa grew its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the DE commercial services industry has been growing, albeit, at a unexciting single-digit rate of 7.36% in the prior twelve months, and a substantial 10.91% over the past five years. This growth is a median of profitable companies of 25 Commercial Services companies in DE including Shigematsu Works, Novus Holdings and Rentokil Initial. This suggests that whatever tailwind the industry is deriving benefit from, Befesa has not been able to leverage it as much as its industry peers.In terms of returns from investment, Befesa has invested its equity funds well leading to a 29.88% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 6.78% exceeds the DE Commercial Services industry of 5.86%, indicating Befesa has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Befesa’s debt level, has increased over the past 3 years from 3.49% to 10.08%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. I recommend you continue to research Befesa to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BFSA’s future growth? Take a look at our free research report of analyst consensus for BFSA’s outlook.
- Financial Health: Are BFSA’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 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.