For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine SÜSS MicroTec SE’s (ETR:SMHN) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
See our latest analysis for SÜSS MicroTec
Could SMHN beat the long-term trend and outperform its industry?
SMHN’s trailing twelve-month earnings (from 30 June 2018) of €11.55m has jumped 54.91% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.16%, indicating the rate at which SMHN is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is solely due to an industry uplift, or if SÜSS MicroTec has seen some company-specific growth.
In the last couple of years, SÜSS MicroTec expanded its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the DE semiconductor industry has been growing its average earnings by double-digit 15.79% over the past twelve months, and 15.09% over the past five years. This growth is a median of profitable companies of 25 Semiconductor companies in DE including Hanwha Q CELLS, Integrated Device Technology and Ambarella. This shows that whatever uplift the industry is benefiting from, SÜSS MicroTec is capable of amplifying this to its advantage.
In terms of returns from investment, SÜSS MicroTec has fallen short of achieving a 20% return on equity (ROE), recording 8.77% instead. Furthermore, its return on assets (ROA) of 5.79% is below the DE Semiconductor industry of 9.60%, indicating SÜSS MicroTec’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for SÜSS MicroTec’s debt level, has increased over the past 3 years from 1.65% to 14.34%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 3.47% to 2.28% over the past 5 years.
What does this mean?
Though SÜSS MicroTec’s past data is helpful, it is only one aspect of my investment thesis. While SÜSS MicroTec has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research SÜSS MicroTec 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 SMHN’s future growth? Take a look at our free research report of analyst consensus for SMHN’s outlook.
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Financial Health: Are SMHN’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.