Examining Lindab International AB’s (STO:LIAB) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess LIAB’s latest performance announced on 30 June 2018 and compare these figures to its longer term trend and industry movements.
Commentary On LIAB’s Past PerformanceLIAB’s trailing twelve-month earnings (from 30 June 2018) of kr335.0m has declined by -0.3% 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 18.4%, indicating the rate at which LIAB is growing has slowed down. Why is this? Let’s examine what’s occurring with margins and if the entire industry is experiencing the hit as well.
Over the last couple of years, revenue growth has not been able to catch up, which suggests that Lindab International’s bottom line has been driven by unsustainable cost-cutting. Inspecting growth from a sector-level, the SE building industry has been relatively flat in terms of earnings growth in the past twelve months, evening out from a robust 15.4% over the past half a decade. This growth is a median of profitable companies of 12 Building companies in SE including ASSA ABLOY, Inwido and Systemair. This means that whatever near-term headwind the industry is enduring, it’s hitting Lindab International harder than its peers.In terms of returns from investment, Lindab International has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. Furthermore, its return on assets (ROA) of 4.1% is below the SE Building industry of 6.3%, indicating Lindab International’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Lindab International’s debt level, has declined over the past 3 years from 7.6% to 7.4%.
What does this mean?
Though Lindab International’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. You should continue to research Lindab International to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LIAB’s future growth? Take a look at our free research report of analyst consensus for LIAB’s outlook.
- Financial Health: Are LIAB’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 June 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.