Assessing Cavco Industries, Inc.'s (NASDAQ:CVCO) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CVCO's recent performance announced on 29 June 2019 and evaluate these figures to its long-term trend and industry movements.
Did CVCO perform better than its track record and industry?
CVCO's trailing twelve-month earnings (from 29 June 2019) of US$70m has increased by 1.2% 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 29%, indicating the rate at which CVCO 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, Cavco Industries has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 9.3% exceeds the US Consumer Durables industry of 7.1%, indicating Cavco Industries has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cavco Industries’s debt level, has increased over the past 3 years from 9.5% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 23% to 6.0% over the past 5 years.
What does this mean?
Cavco Industries's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Cavco Industries to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CVCO’s future growth? Take a look at our free research report of analyst consensus for CVCO’s outlook.
- Financial Health: Are CVCO’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 29 June 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 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.