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Assessing Solvay SA’s (EBR:SOLB) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess SOLB’s latest performance announced on 30 June 2018 and evaluate these figures to its historical trend and industry movements.
View our latest analysis for Solvay
Despite a decline, did SOLB underperform the long-term trend and the industry?
SOLB’s trailing twelve-month earnings (from 30 June 2018) of €734m has declined by -4.1% 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 25%, indicating the rate at which SOLB is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Solvay has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. Furthermore, its return on assets (ROA) of 3.8% is below the BE Chemicals industry of 4.5%, indicating Solvay’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Solvay’s debt level, has declined over the past 3 years from 6.2% to 5.9%.
What does this mean?
Though Solvay’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research Solvay 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 SOLB’s future growth? Take a look at our free research report of analyst consensus for SOLB’s outlook.
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Financial Health: Are SOLB’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 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.