Understanding Titan Cement Company SA’s (ATH:TITK) 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 Titan Cement is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. Check out our latest analysis for Titan Cement
Despite a decline, did TITK underperform the long-term trend and the industry?
TITK’s trailing twelve-month earnings (from 31 March 2018) of €47.50m has more than halved from €127.44m in the prior year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 32.65%, indicating the rate at which TITK is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
Over the last few years, revenue growth has not been able to catch up, which suggests that Titan Cement’s bottom line has been propelled by unsustainable cost-reductions. Looking at growth from a sector-level, the GR basic materials industry has been growing its average earnings by double-digit 25.82% over the prior year, and 18.19% over the past five. This means any tailwind the industry is deriving benefit from, Titan Cement has not been able to reap as much as its average peer.
In terms of returns from investment, Titan Cement has not invested its equity funds well, leading to a 3.68% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 4.17% is below the GR Basic Materials industry of 4.35%, indicating Titan Cement’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Titan Cement’s debt level, has increased over the past 3 years from 2.43% to 3.54%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research Titan Cement to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TITK’s future growth? Take a look at our free research report of analyst consensus for TITK’s outlook.
- Financial Health: Is TITK’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 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.