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Does CTS Eventim AG & Co KGaA’s (ETR:EVD) Recent Track Record Look Strong?

Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess CTS Eventim AG & Co KGaA’s (ETR:EVD) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for CTS Eventim KGaA

Were EVD’s earnings stronger than its past performances and the industry?

EVD’s trailing twelve-month earnings (from 31 March 2018) of €110.86m has increased by 6.60% 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 14.99%, indicating the rate at which EVD is growing has slowed down. To understand what’s happening, let’s take a look at what’s going on with margins and if the entire industry is facing the same headwind.

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In the last couple of years, revenue growth has failed to keep up which indicates that CTS Eventim KGaA’s bottom line has been driven by unsustainable cost-reductions. Eyeballing growth from a sector-level, the DE media industry has been growing its average earnings by double-digit 20.67% in the prior twelve months, and a more subdued 8.79% over the last five years. This means whatever uplift the industry is profiting from, CTS Eventim KGaA has not been able to realize the gains unlike its average peer.

XTRA:EVD Income Statement June 24th 18
XTRA:EVD Income Statement June 24th 18

In terms of returns from investment, CTS Eventim KGaA has invested its equity funds well leading to a 28.17% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.24% exceeds the DE Media industry of 6.68%, indicating CTS Eventim KGaA has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for CTS Eventim KGaA’s debt level, has increased over the past 3 years from 27.70% to 30.65%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 84.77% to 27.49% over the past 5 years.

What does this mean?

CTS Eventim KGaA’s track record can be a valuable insight into its earnings performance, but it certainly 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? You should continue to research CTS Eventim KGaA to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for EVD’s future growth? Take a look at our free research report of analyst consensus for EVD’s outlook.

  2. Financial Health: Is EVD’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.

  3. 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 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.