Understanding Amer Sports Corporation’s (HEL:AMEAS) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Amer Sports is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.
Was AMEAS’s recent earnings decline worse than the long-term trend and the industry?
AMEAS’s trailing twelve-month earnings (from 30 June 2018) of €94m 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 11%, indicating the rate at which AMEAS is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Amer Sports has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 4.6% is below the FI Leisure industry of 7.0%, indicating Amer Sports’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Amer Sports’s debt level, has increased over the past 3 years from 11% to 11%.
What does this mean?
Though Amer Sports’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Amer Sports to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AMEAS’s future growth? Take a look at our free research report of analyst consensus for AMEAS’s outlook.
- Financial Health: Are AMEAS’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 email@example.com.