After looking at Givaudan SA's (SWX:GIVN) latest earnings announcement (31 December 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. 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 Givaudan's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Check out our latest analysis for Givaudan
Were GIVN's earnings stronger than its past performances and the industry?
GIVN's trailing twelve-month earnings (from 31 December 2019) of CHF702m has increased by 5.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.4%, indicating the rate at which GIVN is growing has accelerated. What's enabled this growth? Let's see whether it is merely a result of industry tailwinds, or if Givaudan has experienced some company-specific growth.
In terms of returns from investment, Givaudan has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. Furthermore, its return on assets (ROA) of 7.4% is below the CH Chemicals industry of 8.1%, indicating Givaudan's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Givaudan’s debt level, has declined over the past 3 years from 15% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 35% to 101% over the past 5 years.
What does this mean?
Givaudan's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Givaudan has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Givaudan to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for GIVN’s future growth? Take a look at our free research report of analyst consensus for GIVN’s outlook.
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Financial Health: Are GIVN’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.