Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Troax Group AB (publ)’s (STO:TROAX) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Did TROAX beat its long-term earnings growth trend and its industry?
TROAX’s trailing twelve-month earnings (from 31 December 2018) of €24m has jumped 43% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 32%, indicating the rate at which TROAX is growing has accelerated. What’s enabled this growth? Well, let’s take a look at whether it is only owing to industry tailwinds, or if Troax Group has experienced some company-specific growth.
In terms of returns from investment, Troax Group has invested its equity funds well leading to a 30% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the SE Machinery industry of 8.8%, indicating Troax Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Troax Group’s debt level, has increased over the past 3 years from 17% to 20%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 111% to 95% over the past 5 years.
What does this mean?
Though Troax Group’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Troax Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TROAX’s future growth? Take a look at our free research report of analyst consensus for TROAX’s outlook.
- Financial Health: Are TROAX’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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.