When Getlink SE (ENXTPA:GET) released its most recent earnings update (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Getlink has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see GET has performed. View out our latest analysis for Getlink
Despite a decline, did GET underperform the long-term trend and the industry?GET’s trailing twelve-month earnings (from 31 December 2017) of €107.82m has declined by -21.04% 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 29.52%, indicating the rate at which GET is growing has slowed down. What could be happening here? Let’s examine what’s transpiring with margins and if the entire industry is experiencing the hit as well.
In the last few years, revenue growth has been lagging behind which indicates that Getlink’s bottom line has been propelled by unmaintainable cost-cutting. Eyeballing growth from a sector-level, the FR infrastructure industry has been growing, albeit, at a unexciting single-digit rate of 9.43% in the past year, and 8.26% over the previous five years. This suggests that whatever tailwind the industry is deriving benefit from, Getlink has not been able to gain as much as its industry peers.In terms of returns from investment, Getlink has not invested its equity funds well, leading to a 5.27% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.99% is below the FR Infrastructure industry of 5.70%, indicating Getlink’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Getlink’s debt level, has increased over the past 3 years from 0.92% to 1.82%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Getlink to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GET’s future growth? Take a look at our free research report of analyst consensus for GET’s outlook.
- Financial Health: Is GET’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.