Does Tikkurila Oyj’s (HEL:TIK1V) Recent Track Record Look Strong?

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Today I will examine Tikkurila Oyj’s (HEL:TIK1V) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of TIK1V’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.

See our latest analysis for Tikkurila Oyj

Did TIK1V beat its long-term earnings growth trend and its industry?

TIK1V’s trailing twelve-month earnings (from 31 December 2018) of €15m has jumped 37% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -28%, indicating the rate at which TIK1V is growing has accelerated. How has it been able to do this? Let’s see whether it is merely a result of an industry uplift, or if Tikkurila Oyj has experienced some company-specific growth.

HLSE:TIK1V Income Statement, July 12th 2019
HLSE:TIK1V Income Statement, July 12th 2019

In terms of returns from investment, Tikkurila Oyj has fallen short of achieving a 20% return on equity (ROE), recording 9.7% instead. Furthermore, its return on assets (ROA) of 3.7% is below the FI Chemicals industry of 5.8%, indicating Tikkurila Oyj’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Tikkurila Oyj’s debt level, has declined over the past 3 years from 21% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 37% to 81% over the past 5 years.

What does this mean?

Tikkurila Oyj’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. I recommend you continue to research Tikkurila Oyj to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for TIK1V’s future growth? Take a look at our free research report of analyst consensus for TIK1V’s outlook.
  2. Financial Health: Are TIK1V’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 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 editorial-team@simplywallst.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.