Assessing adesso SE's (XTRA:ADN1) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how adesso is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its it industry peers.
See our latest analysis for adesso
Were ADN1's earnings stronger than its past performances and the industry?
ADN1's trailing twelve-month earnings (from 31 December 2019) of €17m has jumped 24% 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 25%, indicating the rate at which ADN1 is growing has slowed down. Why could this be happening? Well, let's examine what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, adesso has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 6.1% exceeds the DE IT industry of 5.0%, indicating adesso has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for adesso's debt level, has declined over the past 3 years from 17% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 61% over the past 5 years.
What does this mean?
Though adesso's past data is helpful, it is only one aspect of my investment thesis. While adesso has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research adesso to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ADN1's future growth? Take a look at our free research report of analyst consensus for ADN1's outlook.
Financial Health: Are ADN1'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.
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