Did Ethan Allen Interiors Inc’s (NYSE:ETH) Recent Earnings Growth Beat The Trend?
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Ethan Allen Interiors Inc (NYSE:ETH) useful as an attempt to give more color around how Ethan Allen Interiors is currently performing.
See our latest analysis for Ethan Allen Interiors
How ETH fared against its long-term earnings performance and its industry
ETH’s trailing twelve-month earnings (from 30 September 2018) of US$38m has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.3%, indicating the rate at which ETH is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is merely a result of industry tailwinds, or if Ethan Allen Interiors has experienced some company-specific growth.
In terms of returns from investment, Ethan Allen Interiors has fallen short of achieving a 20% return on equity (ROE), recording 9.7% instead. However, its return on assets (ROA) of 6.8% exceeds the US Consumer Durables industry of 6.6%, indicating Ethan Allen Interiors has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Ethan Allen Interiors’s debt level, has declined over the past 3 years from 14% to 12%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. There could be factors that are affecting the entire industry hence the high industry growth rate over the same time frame. I suggest you continue to research Ethan Allen Interiors to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ETH’s future growth? Take a look at our free research report of analyst consensus for ETH’s outlook.
Financial Health: Are ETH’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 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
