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After looking at Archicom S.A.'s (WSE:ARH) latest earnings update (31 December 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.
See our latest analysis for Archicom
How Well Did ARH Perform?
ARH's trailing twelve-month earnings (from 31 December 2018) of zł53m has declined by -6.1% 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 15%, indicating the rate at which ARH is growing has slowed down. Why is this? Well, let's look at what's going on with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Archicom has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 4.5% exceeds the PL Consumer Durables industry of 4.2%, indicating Archicom has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Archicom’s debt level, has increased over the past 3 years from 8.5% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 66% to 54% 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 affecting its business. I suggest you continue to research Archicom 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 ARH’s future growth? Take a look at our free research report of analyst consensus for ARH’s outlook.
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Financial Health: Are ARH’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 December 2018. 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.