Yahoo Finance Should You Be Concerned With Tomra Systems ASA’s (OB:TOM) -14% Earnings Drop?
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Tomra Systems ASA’s (OB:TOM) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
View our latest analysis for Tomra Systems
Despite a decline, did TOM underperform the long-term trend and the industry?
TOM’s trailing twelve-month earnings (from 30 June 2018) of øre591m has declined by -14% 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 13%, indicating the rate at which TOM is growing has slowed down. Why could this be happening? Well, let’s look at what’s occurring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Tomra Systems has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 6.9% exceeds the NO Commercial Services industry of 5.4%, indicating Tomra Systems has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Tomra Systems’s debt level, has declined over the past 3 years from 11% to 10%.
What does this mean?
Tomra Systems’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 influencing its business. You should continue to research Tomra Systems to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for TOM’s future growth? Take a look at our free research report of analyst consensus for TOM’s outlook.
Financial Health: Are TOM’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 editorial-team@simplywallst.com.
