Yahoo Finance Should L'Air Liquide S.A.'s (EPA:AI) Recent Earnings Decline Worry You?
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
After looking at L'Air Liquide S.A.'s (EPA:AI) latest earnings update (31 December 2018), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
See our latest analysis for L'Air Liquide S.A
How Did AI's Recent Performance Stack Up Against Its Past?
AI's trailing twelve-month earnings (from 31 December 2018) of €2.1b has declined by -5.5% 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 7.4%, indicating the rate at which AI is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, L'Air Liquide S.A has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 5.9% exceeds the FR Chemicals industry of 5.1%, indicating L'Air Liquide S.A has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for L'Air Liquide S.A’s debt level, has declined over the past 3 years from 11% to 9.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 64% to 78% over the past 5 years.
What does this mean?
L'Air Liquide S.A'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 impacting its business. You should continue to research L'Air Liquide S.A to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for AI’s future growth? Take a look at our free research report of analyst consensus for AI’s outlook.
Financial Health: Are AI’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 2018. 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.
