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Examining The Timken Company’s (NYSE:TKR) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess TKR’s latest performance announced on 31 December 2018 and weight these figures against its longer term trend and industry movements.
How Well Did TKR Perform?
TKR’s trailing twelve-month earnings (from 31 December 2018) of US$303m has jumped 49% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which TKR is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is merely due to an industry uplift, or if Timken has experienced some company-specific growth.
In terms of returns from investment, Timken has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 7.9% exceeds the US Machinery industry of 6.7%, indicating Timken has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Timken’s debt level, has declined over the past 3 years from 16% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 17% to 102% over the past 5 years.
What does this mean?
Timken’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Timken gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Timken to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TKR’s future growth? Take a look at our free research report of analyst consensus for TKR’s outlook.
- Financial Health: Are TKR’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 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.