Alten SA (EPA:ATE): Has Recent Earnings Growth Beaten Long-Term Trend?

Understanding Alten SA’s (ENXTPA:ATE) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Alten is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.

Check out our latest analysis for Alten

How Did ATE’s Recent Performance Stack Up Against Its Past?

ATE’s trailing twelve-month earnings (from 31 December 2018) of €158m has increased by 7.4% 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 17%, indicating the rate at which ATE is growing has slowed down. To understand what’s happening, let’s look at what’s transpiring with margins and whether the rest of the industry is feeling the heat.

ENXTPA:ATE Income Statement, September 22nd 2019
ENXTPA:ATE Income Statement, September 22nd 2019

In terms of returns from investment, Alten has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 9.6% exceeds the FR IT industry of 4.2%, indicating Alten has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Alten’s debt level, has declined over the past 3 years from 22% to 21%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 1.0% to 11% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Alten to get a more holistic view of the stock by looking at:

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