After reading PARKEN Sport & Entertainment A/S’s (CPSE:PARKEN) most recent earnings announcement (30 September 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Was PARKEN weak performance lately part of a long-term decline?
PARKEN’s trailing twelve-month earnings (from 30 September 2019) of ø68m has declined by -12% 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 25%, indicating the rate at which PARKEN is growing has slowed down. Why could this be happening? Let’s examine what’s occurring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, PARKEN Sport & Entertainment has fallen short of achieving a 20% return on equity (ROE), recording 8.2% instead. Furthermore, its return on assets (ROA) of 4.1% is below the DK Hospitality industry of 4.4%, indicating PARKEN Sport & Entertainment’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for PARKEN Sport & Entertainment’s debt level, has increased over the past 3 years from 5.7% to 6.9%.
What does this mean?
PARKEN Sport & Entertainment’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. You should continue to research PARKEN Sport & Entertainment to get a more holistic view of the stock by looking at:
- Financial Health: Are PARKEN’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.
- Valuation: What is PARKEN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PARKEN is currently mispriced by the market.
- 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 September 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 email@example.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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