After reading Kaufman & Broad S.A.’s (EPA:KOF) latest earnings update (31 May 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether KOF has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Was KOF’s recent earnings decline indicative of a tough track record?
KOF’s trailing twelve-month earnings (from 31 May 2019) of €74m has declined by -4.0% 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 18%, indicating the rate at which KOF is growing has slowed down. Why is this? Well, let’s look at what’s occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, Kaufman & Broad has invested its equity funds well leading to a 37% return on equity (ROE), above the sensible minimum of 20%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I recommend you continue to research Kaufman & Broad to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KOF’s future growth? Take a look at our free research report of analyst consensus for KOF’s outlook.
- Financial Health: Are KOF’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 May 2019. This may not be consistent with full year annual report figures.
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