Understanding how VBG Group AB (publ) (OM:VBG B) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how VBG Group is doing by comparing its latest earnings with its long-term trend as well as the performance of its machinery industry peers.
Did VBG B beat its long-term earnings growth trend and its industry?
VBG B's trailing twelve-month earnings (from 31 December 2019) of kr300m has increased by 9.7% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 31%, indicating the rate at which VBG B is growing has slowed down. Why could this be happening? Well, let's examine what's transpiring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, VBG Group has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 7.7% is below the SE Machinery industry of 8.4%, indicating VBG Group's are utilized less efficiently. However, its return on capital (ROC), which also accounts for VBG Group’s debt level, has increased over the past 3 years from 7.7% to 12%.
What does this mean?
VBG Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research VBG Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for VBG B’s future growth? Take a look at our free research report of analyst consensus for VBG B’s outlook.
- Financial Health: Are VBG B’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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