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Assessing STMicroelectronics N.V.’s (EPA:STM) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess STM’s recent performance announced on 30 March 2019 and evaluate these figures to its long-term trend and industry movements.
How Did STM’s Recent Performance Stack Up Against Its Past?
STM’s trailing twelve-month earnings (from 30 March 2019) of US$1.2b has jumped 32% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 63%, indicating the rate at which STM is growing has slowed down. What could be happening here? Well, let’s look at what’s going on with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, STMicroelectronics has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 11% exceeds the FR Semiconductor industry of 5.6%, indicating STMicroelectronics has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for STMicroelectronics’s debt level, has increased over the past 3 years from 1.9% to 14%.
What does this mean?
STMicroelectronics’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While STMicroelectronics has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research STMicroelectronics to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STM’s future growth? Take a look at our free research report of analyst consensus for STM’s outlook.
- Financial Health: Are STM’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 March 2019. 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.