In This Article:
After looking at Deutsche Lufthansa AG’s (DB:LHA) 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. Check out our latest analysis for Deutsche Lufthansa
Did LHA’s recent earnings growth beat the long-term trend and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze various companies in a uniform manner using new information. For Deutsche Lufthansa, its latest earnings (trailing twelve month) is €2.38B, which compared to the prior year’s figure, has increased by 38.40%. Given that these values may be fairly nearsighted, I have computed an annualized five-year value for Deutsche Lufthansa’s earnings, which stands at €1.11B This means generally, Deutsche Lufthansa has been able to gradually grow its profits over the last few years as well.
How has it been able to do this? Well, let’s take a look at whether it is solely owing to an industry uplift, or if Deutsche Lufthansa has experienced some company-specific growth. Over the last few years, Deutsche Lufthansa expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the DE airlines industry has been growing its average earnings by double-digit 30.71% over the prior year, and 20.49% over the past half a decade. This means any tailwind the industry is benefiting from, Deutsche Lufthansa is able to amplify this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Deutsche Lufthansa to get a more holistic view of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for LHA’s future growth? Take a look at our free research report of analyst consensus for LHA’s outlook.
-
Financial Health: Is LHA’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.
-
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 pass 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.