When Karelia Tobacco Company Inc’s (ATH:KARE) announced its latest earnings (30 June 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Karelia Tobacco Company’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not KARE actually performed well. Below is a quick commentary on how I see KARE has performed.
See our latest analysis for Karelia Tobacco Company
Could KARE beat the long-term trend and outperform its industry?
KARE’s trailing twelve-month earnings (from 30 June 2018) of €60m has increased by 3.0% 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 5.5%, indicating the rate at which KARE is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Karelia Tobacco Company has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 11% exceeds the GR Tobacco industry of 10.0%, indicating Karelia Tobacco Company has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Karelia Tobacco Company’s debt level, has declined over the past 3 years from 31% to 17%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Karelia Tobacco Company gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Karelia Tobacco Company to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KARE’s future growth? Take a look at our free research report of analyst consensus for KARE’s outlook.
- Financial Health: Are KARE’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 June 2018. This may not be consistent with full year annual report figures.
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 editorial-team@simplywallst.com.