In This Article:
Measuring Arkema S.A.'s (EPA:AKE) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AKE's recent performance announced on 30 June 2019 and compare these figures to its historical trend and industry movements.
Check out our latest analysis for Arkema
Was AKE's recent earnings decline indicative of a tough track record?
AKE's trailing twelve-month earnings (from 30 June 2019) of €553m has declined by -15% 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 27%, indicating the rate at which AKE is growing has slowed down. Why is this? Let's examine what's going on with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Arkema has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.0% exceeds the FR Chemicals industry of 4.6%, indicating Arkema has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Arkema’s debt level, has increased over the past 3 years from 9.3% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 54% to 49% 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 unpredictable earnings, can have many factors influencing its business. You should continue to research Arkema to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for AKE’s future growth? Take a look at our free research report of analyst consensus for AKE’s outlook.
-
Financial Health: Are AKE’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 2019. 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.