When Gyldendal A/S (CPSE:GYLD B) released its most recent earnings update (30 June 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Gyldendal’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not GYLD B actually performed well. Below is a quick commentary on how I see GYLD B has performed.
How Well Did GYLD B Perform?
GYLD B’s trailing twelve-month earnings (from 30 June 2019) of ø21m has declined by -1.5% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -20%, indicating the rate at which GYLD B is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Gyldendal has fallen short of achieving a 20% return on equity (ROE), recording 5.9% instead. Furthermore, its return on assets (ROA) of 3.2% is below the DK Media industry of 4.6%, indicating Gyldendal’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Gyldendal’s debt level, has declined over the past 3 years from 15% to 7.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 19% over the past 5 years.
What does this mean?
Though Gyldendal’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that endure a prolonged period of diminishing earnings are going through some sort of reinvestment phase However, if the whole industry is struggling to grow over time, it may be a indicator of a structural shift, which makes Gyldendal and its peers a riskier investment. You should continue to research Gyldendal to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GYLD B’s future growth? Take a look at our free research report of analyst consensus for GYLD B’s outlook.
- Financial Health: Are GYLD B’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 30 June 2019. This may not be consistent with full year annual report figures.
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