Measuring LyondellBasell Industries N.V.’s (NYSE:LYB) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess LYB’s recent performance announced on 31 December 2018 and compare these figures to its historical trend and industry movements.
Despite a decline, did LYB underperform the long-term trend and the industry?
LYB’s trailing twelve-month earnings (from 31 December 2018) of US$4.7b has declined by -4.1% 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 4.6%, indicating the rate at which LYB is growing has slowed down. Why could this be happening? Well, let’s look at what’s occurring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, LyondellBasell Industries has invested its equity funds well leading to a 45% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 18% exceeds the US Chemicals industry of 7.4%, indicating LyondellBasell Industries has used its assets more efficiently. However, its return on capital (ROC), which also accounts for LyondellBasell Industries’s debt level, has declined over the past 3 years from 33% to 23%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 47% to 91% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research LyondellBasell Industries to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for LYB’s future growth? Take a look at our free research report of analyst consensus for LYB’s outlook.
- Financial Health: Are LYB’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.
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