After reading Telestrada SA’s (WSE:TLS) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Did TLS beat its long-term earnings growth trend and its industry?
TLS’s trailing twelve-month earnings (from 31 December 2018) of zł11m has increased by 2.2% 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 34%, indicating the rate at which TLS is growing has slowed down. What could be happening here? Well, let’s look at what’s occurring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, Telestrada has invested its equity funds well leading to a 44% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 37% exceeds the PL Telecom industry of 1.8%, indicating Telestrada has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Telestrada’s debt level, has increased over the past 3 years from 32% to 44%.
What does this mean?
Though Telestrada’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Telestrada gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Telestrada to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TLS’s future growth? Take a look at our free research report of analyst consensus for TLS’s outlook.
- Financial Health: Are TLS’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 31 December 2018. This may not be consistent with full year annual report figures.
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