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When Piraeus Port Authority S.A.'s (ATSE:PPA) announced its latest earnings (31 December 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Piraeus Port Authority's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not PPA actually performed well. Below is a quick commentary on how I see PPA has performed.
Check out our latest analysis for Piraeus Port Authority
Did PPA beat its long-term earnings growth trend and its industry?
PPA's trailing twelve-month earnings (from 31 December 2019) of €35m has jumped 27% 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 39%, indicating the rate at which PPA is growing has slowed down. What could be happening here? Well, let's examine what's occurring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Piraeus Port Authority has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 8.1% exceeds the GR Infrastructure industry of 5.8%, indicating Piraeus Port Authority has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Piraeus Port Authority’s debt level, has increased over the past 3 years from 3.3% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 51% to 24% over the past 5 years.
What does this mean?
Piraeus Port Authority's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Piraeus Port Authority to get a more holistic view of the stock by looking at:
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Financial Health: Are PPA’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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Valuation: What is PPA 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 PPA is currently mispriced by the market.
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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.