When Siegfried Holding AG's (VTX:SFZN) announced its latest earnings (31 December 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Siegfried Holding's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not SFZN actually performed well. Below is a quick commentary on how I see SFZN has performed.
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How SFZN fared against its long-term earnings performance and its industry
SFZN's trailing twelve-month earnings (from 31 December 2018) of CHF56m has jumped 38% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.5%, indicating the rate at which SFZN is growing has accelerated. What's the driver of this growth? Well, let's take a look at if it is merely a result of an industry uplift, or if Siegfried Holding has seen some company-specific growth.
In terms of returns from investment, Siegfried Holding has fallen short of achieving a 20% return on equity (ROE), recording 8.3% instead. Furthermore, its return on assets (ROA) of 5.4% is below the CH Life Sciences industry of 6.5%, indicating Siegfried Holding's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Siegfried Holding's debt level, has increased over the past 3 years from 4.8% to 8.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 21% to 16% over the past 5 years.
What does this mean?
Siegfried Holding's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Siegfried Holding has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Siegfried Holding to get a more holistic view of the stock by looking at:
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
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