For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Trinseo SA’s (NYSE:TSE) 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 TSE
How TSE fared against its long-term earnings performance and its industry
I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to analyze many different companies on a similar basis, using the latest information. For Trinseo, the latest earnings is $289.2M, which, in comparison to the previous year’s figure, has grown by a fairly soft 2.21%. Since these values may be fairly nearsighted, I have calculated an annualized five-year figure for Trinseo’s earnings, which stands at $71.1M. This means that, generally, Trinseo has been able to gradually improve its profits over the past couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is solely due to an industry uplift, or if Trinseo has seen some company-specific growth. In the last couple of years, Trinseo grew bottom-line, while its top-line fell, by effectively managing its costs. This has caused to a margin expansion and profitability over time. Looking at growth from a sector-level, the US chemicals industry has been growing its average earnings by double-digit 14.21% over the past twelve months, and a less exciting 5.47% over the past five years. This means whatever tailwind the industry is deriving benefit from, Trinseo has not been able to realize the gains unlike its average peer.
What does this mean?
Trinseo’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 Trinseo gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Trinseo to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for TSE’s future growth? Take a look at our free research report of analyst consensus for TSE’s outlook.
2. Financial Health: Is TSE’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.