In this commentary, I will examine Gilat Satellite Networks Ltd.'s (NasdaqGS:GILT) latest earnings update (30 September 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the communications industry performed. As an investor, I find it beneficial to assess GILT’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Were GILT's earnings stronger than its past performances and the industry?
GILT recently turned a profit of US$18m (most recent trailing twelve-months) compared to its average loss of -US$8.5m over the past five years.
In terms of returns from investment, Gilat Satellite Networks has fallen short of achieving a 20% return on equity (ROE), recording 7.8% instead. Furthermore, its return on assets (ROA) of 4.5% is below the US Communications industry of 5.9%, indicating Gilat Satellite Networks's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Gilat Satellite Networks’s debt level, has increased over the past 3 years from 0.7% to 9.8%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 20% to 3.6% over the past 5 years.
What does this mean?
Gilat Satellite Networks's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Gilat Satellite Networks has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Gilat Satellite Networks to get a better picture of the stock by looking at:
- Financial Health: Are GILT’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 GILT 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 GILT 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 30 September 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
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