Yahoo Finance Nordwest Handel AG's (FRA:NWX) Earnings Grew 11%, Did It Beat Long-Term Trend?
After looking at Nordwest Handel AG's (DB:NWX) latest earnings announcement (31 December 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. 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 a crucial aspect. Below is a brief commentary on my key takeaways.
View our latest analysis for Nordwest Handel
Did NWX beat its long-term earnings growth trend and its industry?
NWX's trailing twelve-month earnings (from 31 December 2019) of €7.7m has jumped 11% 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 18%, indicating the rate at which NWX is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Nordwest Handel has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 3.6% is below the DE Trade Distributors industry of 6.3%, indicating Nordwest Handel's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Nordwest Handel’s debt level, has increased over the past 3 years from 7.7% to 11%.
What does this mean?
Though Nordwest Handel's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Nordwest Handel to get a better picture of the stock by looking at:
Financial Health: Are NWX’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.
Valuation: What is NWX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NWX is currently mispriced by the market.
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.
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