Assessing Geke SA’s (ATH:PRESD) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess PRESD’s recent performance announced on 31 December 2017 and evaluate these figures to its longer term trend and industry movements.
Did PRESD beat its long-term earnings growth trend and its industry?PRESD’s trailing twelve-month earnings (from 31 December 2017) of €2.51m has jumped 38.78% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -13.10%, indicating the rate at which PRESD is growing has accelerated. What’s enabled this growth? Let’s see if it is only because of an industry uplift, or if Geke has experienced some company-specific growth.
Even though both top-line and bottom-line growth rates in the last couple of years were on average negative, earnings were more so. While this has led to a margin contraction, it has lessened Geke’s earnings contraction. Eyeballing growth from a sector-level, the GR hospitality industry has been growing its average earnings by double-digit 25.74% in the previous year, and 18.44% over the last five years. Since the Hospitality sector in GR is relatively small, I’ve included similar companies in the wider region in order to get a better idea of the growth, which is a median of profitable companies of companies such as Greek Organization of Football Prognostics, Kiriacoulis Mediterranean Cruises Shipping and Lampsa Hellenic Hotels. This means that whatever uplift the industry is gaining from, Geke is capable of leveraging this to its advantage.In terms of returns from investment, Geke has not invested its equity funds well, leading to a 5.18% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.70% is below the GR Hospitality industry of 6.54%, indicating Geke’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Geke’s debt level, has increased over the past 3 years from 3.32% to 5.53%.
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 Geke to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PRESD’s future growth? Take a look at our free research report of analyst consensus for PRESD’s outlook.
- Financial Health: Is PRESD’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.