Today I will take a look at Elekta AB (publ)’s (STO:EKTA B) most recent earnings update (31 January 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the medical equipment industry performed. As an investor, I find it beneficial to assess EKTA B’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Despite a decline, did EKTA B underperform the long-term trend and the industry?
EKTA B’s trailing twelve-month earnings (from 31 January 2019) of kr915m has declined by -2.6% 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 -4.1%, indicating the rate at which EKTA B is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Elekta has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 4.4% is below the SE Medical Equipment industry of 6.3%, indicating Elekta’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Elekta’s debt level, has increased over the past 3 years from 8.5% to 10%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 85% to 62% over the past 5 years.
What does this mean?
Elekta’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I suggest you continue to research Elekta to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EKTA B’s future growth? Take a look at our free research report of analyst consensus for EKTA B’s outlook.
- Financial Health: Are EKTA B’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 January 2019. This may not be consistent with full year annual report figures.
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