After reading The Swatch Group AG's (VTX:UHR) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Swatch Group's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
View our latest analysis for Swatch Group
How UHR fared against its long-term earnings performance and its industry
UHR's trailing twelve-month earnings (from 31 December 2018) of CHF845m has jumped 15% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -22%, indicating the rate at which UHR is growing has accelerated. What's enabled this growth? Let's take a look at if it is merely attributable to an industry uplift, or if Swatch Group has experienced some company-specific growth.
In terms of returns from investment, Swatch Group has fallen short of achieving a 20% return on equity (ROE), recording 7.7% instead. Furthermore, its return on assets (ROA) of 6.2% is below the CH Luxury industry of 8.0%, indicating Swatch Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Swatch Group’s debt level, has declined over the past 3 years from 12% to 9.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.5% to 2.0% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There could be variables that are influencing the industry as a whole, hence the high industry growth rate over the same time frame. I suggest you continue to research Swatch Group to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for UHR’s future growth? Take a look at our free research report of analyst consensus for UHR’s outlook.
-
Financial Health: Are UHR’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.