Want To Invest In Atea ASA (OB:ATEA)? Here's How It Performed Lately

In this commentary, I will examine Atea ASA's (OB:ATEA) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the it industry performed. As an investor, I find it beneficial to assess ATEA’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.

Check out our latest analysis for Atea

Despite a decline, did ATEA underperform the long-term trend and the industry?

ATEA's trailing twelve-month earnings (from 31 December 2018) of øre467m has declined by -14% 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 9.2%, indicating the rate at which ATEA is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and if the rest of the industry is feeling the heat.

In terms of returns from investment, Atea has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. Furthermore, its return on assets (ROA) of 3.4% is below the NO IT industry of 8.9%, indicating Atea's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Atea’s debt level, has increased over the past 3 years from 10% to 17%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 33% to 24% over the past 5 years.

What does this mean?

Atea's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. You should continue to research Atea to get a more holistic view of the stock by looking at:

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