Today I will examine Bufab AB (publ)’s (STO:BUFAB) latest earnings update (30 September 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of BUFAB’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Did BUFAB’s recent earnings growth beat the long-term trend and the industry?
BUFAB’s trailing twelve-month earnings (from 30 September 2018) of kr245m has jumped 45% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 16%, indicating the rate at which BUFAB is growing has accelerated. How has it been able to do this? Let’s see if it is merely owing to an industry uplift, or if Bufab has seen some company-specific growth.
In terms of returns from investment, Bufab has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 7.5% is below the SE Trade Distributors industry of 7.5%, indicating Bufab’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Bufab’s debt level, has increased over the past 3 years from 10% to 11%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Bufab has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Bufab to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BUFAB’s future growth? Take a look at our free research report of analyst consensus for BUFAB’s outlook.
- Financial Health: Are BUFAB’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 email@example.com.