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For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Vidrala, S.A.’s (BME:VID) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Did VID beat its long-term earnings growth trend and its industry?
VID’s trailing twelve-month earnings (from 31 December 2018) of €116m has jumped 30% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which VID is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely due to industry tailwinds, or if Vidrala has seen some company-specific growth.
In terms of returns from investment, Vidrala has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 8.7% exceeds the ES Packaging industry of 5.7%, indicating Vidrala has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Vidrala’s debt level, has increased over the past 3 years from 8.5% to 13%.
What does this mean?
Though Vidrala’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Vidrala to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for VID’s future growth? Take a look at our free research report of analyst consensus for VID’s outlook.
- Financial Health: Are VID’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 December 2018. 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 firstname.lastname@example.org. 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.