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After reading Elekta AB (publ)'s (STO:EKTA B) most recent earnings announcement (31 July 2019), 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 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 a crucial aspect. Below is a brief commentary on my key takeaways.
See our latest analysis for Elekta
Was EKTA B's recent earnings decline indicative of a tough track record?
EKTA B's trailing twelve-month earnings (from 31 July 2019) of kr1.2b has declined by -10% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 16%, indicating the rate at which EKTA B is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Elekta has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 5.2% exceeds the SE Medical Equipment industry of 4.7%, indicating Elekta has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Elekta’s debt level, has increased over the past 3 years from 11% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 72% to 58% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Elekta 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 EKTA B’s future growth? Take a look at our free research report of analyst consensus for EKTA B’s outlook.
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Financial Health: Are EKTA B’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 July 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.