How Has Alaska Communications Systems Group, Inc.'s (NASDAQ:ALSK) Earnings Fared Against The Long Term Trend
Measuring Alaska Communications Systems Group, Inc.'s (NasdaqGS:ALSK) track record of past performance is a useful exercise for investors. It enables 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 ALSK's recent performance announced on 31 March 2020 and weigh these figures against its long-term trend and industry movements.
View our latest analysis for Alaska Communications Systems Group
Commentary On ALSK's Past Performance
ALSK's trailing twelve-month earnings (from 31 March 2020) of US$7.1m has declined by -1.1% 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 -8.7%, indicating the rate at which ALSK is growing has slowed down. Why could this be happening? Let's examine what's transpiring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Alaska Communications Systems Group has fallen short of achieving a 20% return on equity (ROE), recording 4.2% instead. Furthermore, its return on assets (ROA) of 3.4% is below the US Telecom industry of 4.9%, indicating Alaska Communications Systems Group's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Alaska Communications Systems Group’s debt level, has increased over the past 3 years from 4.2% to 4.8%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 126% to 101% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Typically companies that experience an extended period of reduction in earnings are undergoing some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a sign of a structural change, which makes Alaska Communications Systems Group and its peers a riskier investment. You should continue to research Alaska Communications Systems Group to get a better picture of the stock by looking at:
Financial Health: Are ALSK’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 ALSK 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 ALSK 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 31 March 2020. This may not be consistent with full year annual report figures.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.
