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After looking at Silicon Laboratories Inc.'s (NASDAQ:SLAB) latest earnings announcement (30 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. 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.
How Well Did SLAB Perform?
SLAB's trailing twelve-month earnings (from 30 March 2019) of US$63m has increased by 8.0% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 16%, indicating the rate at which SLAB is growing has slowed down. To understand what's happening, let’s take a look at what’s going on with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Silicon Laboratories has fallen short of achieving a 20% return on equity (ROE), recording 5.9% instead. Furthermore, its return on assets (ROA) of 4.6% is below the US Semiconductor industry of 9.6%, indicating Silicon Laboratories's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Silicon Laboratories’s debt level, has increased over the past 3 years from 4.3% to 5.2%.
What does this mean?
Silicon Laboratories'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 Silicon Laboratories gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Silicon Laboratories to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SLAB’s future growth? Take a look at our free research report of analyst consensus for SLAB’s outlook.
- Financial Health: Are SLAB’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 30 March 2019. 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 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. Thank you for reading.