Measuring Insteel Industries Inc’s (NASDAQ:IIIN) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess IIIN’s recent performance announced on 31 March 2018 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Insteel Industries
Was IIIN’s recent earnings decline indicative of a tough track record?
I prefer to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to assess many different companies on a more comparable basis, using the most relevant data points. For Insteel Industries, its most recent trailing-twelve-month earnings is US$24.66M, which compared to the previous year’s figure, has sunken by a significant -30.07%. Given that these values are fairly myopic, I’ve estimated an annualized five-year value for Insteel Industries’s net income, which stands at US$16.95M This means although earnings declined against the prior year, in the long run, Insteel Industries’s earnings have been rising on average.
How has it been able to do this? Let’s take a look at whether it is merely attributable to an industry uplift, or if Insteel Industries has seen some company-specific growth. In the last couple of years, Insteel Industries expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Inspecting growth from a sector-level, the US building industry has been growing its average earnings by double-digit 16.07% over the previous twelve months, and 15.68% over the past half a decade. This means any tailwind the industry is benefiting from, Insteel Industries has not been able to gain as much as its industry peers.
What does this mean?
Though Insteel Industries’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors influencing its business. I suggest you continue to research Insteel Industries to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for IIIN’s future growth? Take a look at our free research report of analyst consensus for IIIN’s outlook.
- Financial Health: Is IIIN’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.