Yahoo Finance How FRIWO AG’s (FRA:CEA) Earnings Growth Stacks Up Against The Industry
When FRIWO AG (FRA:CEA) released its most recent earnings update (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how FRIWO performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see CEA has performed.
View our latest analysis for FRIWO
Was CEA’s recent earnings decline indicative of a tough track record?
CEA’s trailing twelve-month earnings (from 30 June 2018) of €4.4m has declined by -37.0% 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 34.5%, indicating the rate at which CEA is growing has slowed down. Why is this? Well, let’s look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well.
In the past few years, revenue growth has been lagging behind which suggests that FRIWO’s bottom line has been propelled by unmaintainable cost-cutting.
Looking at growth from a sector-level, the DE electrical industry has been growing, albeit, at a unexciting single-digit rate of 4.3% over the previous year, and a substantial 22.1% over the past five years. This growth is a median of profitable companies of 10 Electrical companies in DE including AS Rigas Elektromasinbuves rupnica, PNE Wind and PNE. This shows that any recent headwind the industry is experiencing, it’s hitting FRIWO harder than its peers.
In terms of returns from investment, FRIWO has invested its equity funds well leading to a 21.6% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.1% exceeds the DE Electrical industry of 5.8%, indicating FRIWO has used its assets more efficiently. However, its return on capital (ROC), which also accounts for FRIWO’s debt level, has declined over the past 3 years from 20.1% to 19.8%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research FRIWO to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CEA’s future growth? Take a look at our free research report of analyst consensus for CEA’s outlook.
Financial Health: Are CEA’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 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.
