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After looking at Rémy Cointreau SA’s (EPA:RCO) latest earnings announcement (31 March 2018), 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 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 Rémy Cointreau
How RCO fared against its long-term earnings performance and its industry
RCO’s trailing twelve-month earnings (from 31 March 2018) of €148m has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.7%, indicating the rate at which RCO is growing has accelerated. How has it been able to do this? Let’s take a look at whether it is only attributable to industry tailwinds, or if Rémy Cointreau has seen some company-specific growth.
In terms of returns from investment, Rémy Cointreau has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 6.1% exceeds the FR Beverage industry of 3.1%, indicating Rémy Cointreau has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Rémy Cointreau’s debt level, has increased over the past 3 years from 8.1% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 43% to 33% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Rémy Cointreau gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Rémy Cointreau 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 RCO’s future growth? Take a look at our free research report of analyst consensus for RCO’s outlook.
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Financial Health: Are RCO’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 March 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.