Want To Invest In AB Inter RAO Lietuva (WSE:IRL)? Here's How It Performed Lately

Understanding AB Inter RAO Lietuva's (WSE:IRL) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how AB Inter RAO Lietuva is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.

View our latest analysis for AB Inter RAO Lietuva

How Did IRL's Recent Performance Stack Up Against Its Past?

IRL's trailing twelve-month earnings (from 31 March 2018) of €8.96m has jumped 11.10% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.82%, indicating the rate at which IRL is growing has accelerated. What's enabled this growth? Well, let’s take a look at whether it is only due to industry tailwinds, or if AB Inter RAO Lietuva has seen some company-specific growth.

Over the last few years, even though bottom-line growth has seen a weakening, top-line growth has fallen at a faster rate, causing a margin expansion and AB Inter RAO Lietuva still maintaining profitability. Eyeballing growth from a sector-level, the PL electric utilities industry has been growing its average earnings by double-digit 18.50% over the previous twelve months, . This is a change from a volatile drop of -10.10% in the last few years. This growth is a median of profitable companies of 7 Electric Utilities companies in PL including Elektrocieplownia Bedzin, Zespól Elektrowni Patnów-Adamów-Konin and PGE Polska Grupa Energetyczna. This shows that, in the recent industry expansion, AB Inter RAO Lietuva has not been able to leverage it as much as its industry peers.

In terms of returns from investment, AB Inter RAO Lietuva has invested its equity funds well leading to a 44.11% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 18.97% exceeds the PL Electric Utilities industry of 4.07%, indicating AB Inter RAO Lietuva has used its assets more efficiently. However, its return on capital (ROC), which also accounts for AB Inter RAO Lietuva’s debt level, has declined over the past 3 years from 43.09% to 37.76%.

What does this mean?

AB Inter RAO Lietuva's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There could be variables that are impacting the industry as a whole, thus the high industry growth rate over the same time period. I recommend you continue to research AB Inter RAO Lietuva to get a better picture of the stock by looking at:

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

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.