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When Hypoport AG (FRA:HYQ) announced its most recent earnings (31 March 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Hypoport performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see HYQ has performed.
Did HYQ’s recent earnings growth beat the long-term trend and the industry?
HYQ’s trailing twelve-month earnings (from 31 March 2019) of €23m has jumped 21% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 25%, indicating the rate at which HYQ is growing has slowed down. Why could this be happening? Well, let’s examine what’s transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Hypoport has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 7.5% exceeds the DE Diversified Financial industry of 6.4%, indicating Hypoport has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Hypoport’s debt level, has declined over the past 3 years from 32% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 42% to 64% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Hypoport has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Hypoport to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HYQ’s future growth? Take a look at our free research report of analyst consensus for HYQ’s outlook.
- Financial Health: Are HYQ’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.