For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Heineken N.V. (ENXTAM:HEIA) useful as an attempt to give more color around how Heineken is currently performing.
Did HEIA beat its long-term earnings growth trend and its industry?
HEIA's trailing twelve-month earnings (from 31 December 2019) of €2.2b has jumped 13% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.1%, indicating the rate at which HEIA is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only because of an industry uplift, or if Heineken has seen some company-specific growth.
In terms of returns from investment, Heineken has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 5.6% exceeds the NL Beverage industry of 5.5%, indicating Heineken has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Heineken’s debt level, has increased over the past 3 years from 10% to 11%.
What does this mean?
Heineken's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Heineken gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Heineken to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HEIA’s future growth? Take a look at our free research report of analyst consensus for HEIA’s outlook.
- Financial Health: Are HEIA’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 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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