After looking at SGS SA’s (VTX:SGSN) latest earnings update (30 June 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. 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 an important aspect. In this article I briefly touch on my key findings.

Check out our latest analysis for SGS

How Did SGSN’s Recent Performance Stack Up Against Its Past?

SGSN’s trailing twelve-month earnings (from 30 June 2018) of CHF619m has jumped 10% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.001%, indicating the rate at which SGSN is growing has accelerated. What’s the driver of this growth? Let’s see if it is only a result of industry tailwinds, or if SGS has experienced some company-specific growth.

In terms of returns from investment, SGS has invested its equity funds well leading to a 40% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the CH Professional Services industry of 7.7%, indicating SGS has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for SGS’s debt level, has increased over the past 3 years from 21% to 25%.

What does this mean?

Though SGS’s past data is helpful, it is only one aspect of my investment thesis. While SGS has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research SGS to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for SGSN’s future growth? Take a look at our free research report of analyst consensus for SGSN’s outlook.

2. Financial Health: Are SGSN’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.

3. 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 30 June 2018. This may not be consistent with full year annual report figures.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.