Does Sweco AB (publ)'s (STO:SWEC B) 11% Earnings Growth Make It An Outperformer?
In this article, I will take a look at Sweco AB (publ)'s (OM:SWEC B) most recent earnings update (31 December 2019) and compare these latest figures against its performance over the past few years, along with how the rest of SWEC B's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
View our latest analysis for Sweco
Did SWEC B beat its long-term earnings growth trend and its industry?
SWEC B's trailing twelve-month earnings (from 31 December 2019) of kr1.4b has jumped 11% 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 22%, indicating the rate at which SWEC B is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Sweco has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 7.8% exceeds the SE Construction industry of 6.7%, indicating Sweco has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Sweco’s debt level, has declined over the past 3 years from 17% to 16%.
What does this mean?
Though Sweco'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? I recommend you continue to research Sweco to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SWEC B’s future growth? Take a look at our free research report of analyst consensus for SWEC B’s outlook.
Financial Health: Are SWEC 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 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.
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