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Investors with a long-term horizong may find it valuable to assess Akzo Nobel N.V.'s (AMS:AKZA) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Akzo Nobel is currently performing.
How Did AKZA's Recent Performance Stack Up Against Its Past?
AKZA's trailing twelve-month earnings (from 31 March 2019) of €354m has declined by -17% 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 -14%, indicating the rate at which AKZA is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Akzo Nobel has fallen short of achieving a 20% return on equity (ROE), recording 4.5% instead. Furthermore, its return on assets (ROA) of 2.7% is below the NL Chemicals industry of 6.1%, indicating Akzo Nobel's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Akzo Nobel’s debt level, has declined over the past 3 years from 14% to 5.1%.
What does this mean?
Though Akzo Nobel's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I recommend you continue to research Akzo Nobel to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AKZA’s future growth? Take a look at our free research report of analyst consensus for AKZA’s outlook.
- Financial Health: Are AKZA’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 March 2019. 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.