MLP SE (FRA:MLP): Did It Outperform The Industry?

For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on MLP SE (FRA:MLP) useful as an attempt to give more color around how MLP is currently performing. View out our latest analysis for MLP

How Did MLP’s Recent Performance Stack Up Against Its Past?

MLP’s trailing twelve-month earnings (from 31 March 2018) of €28.55m has jumped 66.91% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.32%, indicating the rate at which MLP is growing has accelerated. How has it been able to do this? Let’s take a look at if it is merely owing to industry tailwinds, or if MLP has experienced some company-specific growth.

Over the last few years, MLP top-line expansion has overtaken earnings and the growth rate of expenses. Though this has caused a margin contraction, it has moderated MLP’s earnings contraction. Eyeballing growth from a sector-level, the DE capital markets industry has been growing its average earnings by double-digit 17.57% in the past year, and 15.17% over the past five. This growth is a median of profitable companies of 25 Capital Markets companies in DE including Novavisions, Strategic Investments and Lippo Securities. This shows that whatever uplift the industry is gaining from, MLP is capable of amplifying this to its advantage.

DB:MLP Income Statement July 6th 18
DB:MLP Income Statement July 6th 18
In terms of returns from investment, MLP has not invested its equity funds well, leading to a 6.76% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 1.32% is below the DE Capital Markets industry of 4.58%, indicating MLP’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for MLP’s debt level, has declined over the past 3 years from 2.41% to 2.02%.

What does this mean?

While past data is useful, it 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 recommend you continue to research MLP to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for MLP’s future growth? Take a look at our free research report of analyst consensus for MLP’s outlook.
  2. Financial Health: Is MLP’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 March 2018. This may not be consistent with full year annual report figures.