When AmRest Holdings SE’s (WSE:EAT) announced its latest earnings (30 September 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were AmRest Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not EAT actually performed well. Below is a quick commentary on how I see EAT has performed.
How Did EAT’s Recent Performance Stack Up Against Its Past?
EAT’s trailing twelve-month earnings (from 30 September 2018) of €41m has declined by -7.6% 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%, indicating the rate at which EAT is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, AmRest Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 4.9% is below the PL Hospitality industry of 7.7%, indicating AmRest Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for AmRest Holdings’s debt level, has declined over the past 3 years from 8.7% to 8.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 91% to 143% over the past 5 years.
What does this mean?
Though AmRest Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research AmRest Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EAT’s future growth? Take a look at our free research report of analyst consensus for EAT’s outlook.
- Financial Health: Are EAT’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 September 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 firstname.lastname@example.org.