For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Vilmorin & Cie SA (ENXTPA:RIN) useful as an attempt to give more color around how Vilmorin & Cie is currently performing.
Have RIN's earnings improved against past performances and the industry?
RIN's trailing twelve-month earnings (from 30 June 2019) of €74m has declined by -0.3% 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 1.1%, indicating the rate at which RIN is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Vilmorin & Cie has fallen short of achieving a 20% return on equity (ROE), recording 5.9% instead. Furthermore, its return on assets (ROA) of 3.3% is below the FR Food industry of 3.7%, indicating Vilmorin & Cie's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Vilmorin & Cie’s debt level, has declined over the past 3 years from 4.6% to 3.6%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 75% to 88% over the past 5 years.
What does this mean?
Though Vilmorin & Cie's past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that face a prolonged period of diminishing earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes Vilmorin & Cie and its peers a riskier investment. You should continue to research Vilmorin & Cie to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for RIN’s future growth? Take a look at our free research report of analyst consensus for RIN’s outlook.
- Financial Health: Are RIN’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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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