After reading J & J Snack Foods Corp.'s (NASDAQ:JJSF) most recent earnings announcement (29 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether J & J Snack Foods's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Despite a decline, did JJSF underperform the long-term trend and the industry?
JJSF's trailing twelve-month earnings (from 29 December 2018) of US$85m has declined by -16% 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 8.4%, indicating the rate at which JJSF is growing has slowed down. What could be happening here? Let's examine what's going on with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, J & J Snack Foods has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 8.5% exceeds the US Food industry of 6.9%, indicating J & J Snack Foods has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for J & J Snack Foods’s debt level, has declined over the past 3 years from 17% to 14%.
What does this mean?
J & J Snack Foods's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research J & J Snack Foods to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for JJSF’s future growth? Take a look at our free research report of analyst consensus for JJSF’s outlook.
- Financial Health: Are JJSF’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 December 2018. This may not be consistent with full year annual report figures.
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