In This Article:
Examining UPM-Kymmene Oyj's (HEL:UPM) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess UPM's latest performance announced on 31 March 2019 and weigh these figures against its longer term trend and industry movements.
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Check out our latest analysis for UPM-Kymmene Oyj
Could UPM beat the long-term trend and outperform its industry?
UPM's trailing twelve-month earnings (from 31 March 2019) of €1.5b has jumped 43% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 20%, indicating the rate at which UPM is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely attributable to industry tailwinds, or if UPM-Kymmene Oyj has seen some company-specific growth.
In terms of returns from investment, UPM-Kymmene Oyj has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 10% exceeds the FI Forestry industry of 5.9%, indicating UPM-Kymmene Oyj has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for UPM-Kymmene Oyj’s debt level, has increased over the past 3 years from 7.0% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 54% to 13% over the past 5 years.
What does this mean?
Though UPM-Kymmene Oyj's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research UPM-Kymmene Oyj to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for UPM’s future growth? Take a look at our free research report of analyst consensus for UPM’s outlook.
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Financial Health: Are UPM’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 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.