Yahoo Finance Does HeidelbergCement AG's (FRA:HEI) -5.2% Earnings Drop Reflect A Longer Term Trend?
For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on HeidelbergCement AG (FRA:HEI) useful as an attempt to give more color around how HeidelbergCement is currently performing.
View our latest analysis for HeidelbergCement
Was HEI's recent earnings decline indicative of a tough track record?
HEI's trailing twelve-month earnings (from 30 June 2019) of €999m has declined by -5.2% 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 HEI is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, HeidelbergCement has fallen short of achieving a 20% return on equity (ROE), recording 6.8% instead. Furthermore, its return on assets (ROA) of 3.4% is below the DE Basic Materials industry of 6.0%, indicating HeidelbergCement's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for HeidelbergCement’s debt level, has declined over the past 3 years from 6.7% to 5.8%.
What does this mean?
Though HeidelbergCement's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. You should continue to research HeidelbergCement to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for HEI’s future growth? Take a look at our free research report of analyst consensus for HEI’s outlook.
Financial Health: Are HEI’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 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 editorial-team@simplywallst.com. 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.
