KPS AG (FRA:KSC): Does The Earnings Decline Make It An Underperformer?

Measuring KPS AG’s (DB:KSC) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess KSC’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for KPS

Commentary On KSC’s Past Performance

I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to examine many different companies on a similar basis, using new information. For KPS, its most recent earnings (trailing twelve month) is €16.70M, which, in comparison to the previous year’s level, has declined by -14.70%. Since these values may be somewhat short-term thinking, I have determined an annualized five-year figure for KPS’s earnings, which stands at €14.68M This suggests that while earnings declined from last year, over the longer term, KPS’s earnings have been growing on average.

DB:KSC Income Statement May 24th 18
DB:KSC Income Statement May 24th 18
What’s the driver of this growth? Let’s see whether it is only due to an industry uplift, or if KPS has seen some company-specific growth. The climb in earnings seems to be driven by a solid top-line increase outpacing its growth rate of expenses. Though this resulted in a margin contraction, it has made KPS more profitable. Eyeballing growth from a sector-level, the DE it industry has been growing its average earnings by double-digit 12.56% over the past year, and 12.98% over the past five. This means that whatever tailwind the industry is deriving benefit from, KPS has not been able to realize the gains unlike its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I recommend you continue to research KPS to get a better picture of the stock by looking at:

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