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When AF Gruppen ASA (OB:AFG) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well AF Gruppen has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see AFG has performed.
Check out our latest analysis for AF Gruppen
Did AFG's recent earnings growth beat the long-term trend and the industry?
AFG's trailing twelve-month earnings (from 31 March 2019) of øre782m has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.9%, indicating the rate at which AFG is growing has accelerated. What's enabled this growth? Let's take a look at whether it is only because of an industry uplift, or if AF Gruppen has seen some company-specific growth.
In terms of returns from investment, AF Gruppen has invested its equity funds well leading to a 41% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.5% exceeds the NO Construction industry of 4.4%, indicating AF Gruppen has used its assets more efficiently. However, its return on capital (ROC), which also accounts for AF Gruppen’s debt level, has declined over the past 3 years from 37% to 27%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 11% to 44% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as AF Gruppen gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research AF Gruppen to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for AFG’s future growth? Take a look at our free research report of analyst consensus for AFG’s outlook.
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Financial Health: Are AFG’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.
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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.