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Was Amica SA’s (WSE:AMC) Earnings Growth Better Than The Industry’s?

Measuring Amica SA’s (WSE:AMC) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess AMC’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements.

See our latest analysis for Amica

Did AMC beat its long-term earnings growth trend and its industry?

AMC’s trailing twelve-month earnings (from 31 March 2018) of zł144.62m has jumped 37.49% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 13.17%, indicating the rate at which AMC is growing has accelerated. What’s the driver of this growth? Let’s see if it is merely a result of industry tailwinds, or if Amica has seen some company-specific growth.

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In the past couple of years, Amica expanded its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the PL consumer durables industry has been growing its average earnings by double-digit 45.90% over the prior twelve months, and 13.17% over the previous five years. This growth is a median of profitable companies of 16 Consumer Durables companies in PL including Gorenje d.d, Ronson Development and Fabryki Mebli Forte Spólka Akcyjna. This means whatever uplift the industry is deriving benefit from, Amica has not been able to leverage it as much as its average peer.

WSE:AMC Income Statement Export August 23rd 18
WSE:AMC Income Statement Export August 23rd 18

In terms of returns from investment, Amica has fallen short of achieving a 20% return on equity (ROE), recording 18.87% instead. However, its return on assets (ROA) of 8.92% exceeds the PL Consumer Durables industry of 4.79%, indicating Amica has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Amica’s debt level, has declined over the past 3 years from 17.93% to 10.48%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 25.38% to 42.01% over the past 5 years.

What does this mean?

Amica’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Amica has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Amica to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for AMC’s future growth? Take a look at our free research report of analyst consensus for AMC’s outlook.

  2. Financial Health: Are AMC’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.

  3. 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 March 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.