Assessing NIBE Industrier AB (publ)'s (OM:NIBE B) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how NIBE Industrier is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its building industry peers.
Did NIBE B beat its long-term earnings growth trend and its industry?
NIBE B's trailing twelve-month earnings (from 31 December 2019) of kr2.2b has increased by 4.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which NIBE B is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, NIBE Industrier has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 6.4% is below the SE Building industry of 7.0%, indicating NIBE Industrier's are utilized less efficiently. However, its return on capital (ROC), which also accounts for NIBE Industrier’s debt level, has increased over the past 3 years from 9.3% to 9.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 115% to 51% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research NIBE Industrier to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NIBE B’s future growth? Take a look at our free research report of analyst consensus for NIBE B’s outlook.
- Financial Health: Are NIBE 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 December 2019. This may not be consistent with full year annual report figures.
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.
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. Thank you for reading.