For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Ducommun Incorporated (NYSE:DCO) useful as an attempt to give more color around how Ducommun is currently performing.
Could DCO beat the long-term trend and outperform its industry?
DCO's trailing twelve-month earnings (from 28 September 2019) of US$24m has jumped 36% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 30%, indicating the rate at which DCO is growing has accelerated. What's enabled this growth? Well, let’s take a look at whether it is solely owing to industry tailwinds, or if Ducommun has experienced some company-specific growth.
In terms of returns from investment, Ducommun has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 6.0% is below the US Aerospace & Defense industry of 6.2%, indicating Ducommun's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Ducommun’s debt level, has increased over the past 3 years from 5.4% to 9.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 120% to 79% over the past 5 years.
What does this mean?
Ducommun'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? You should continue to research Ducommun to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DCO’s future growth? Take a look at our free research report of analyst consensus for DCO’s outlook.
- Financial Health: Are DCO’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 28 September 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.