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 Spartan Motors, Inc. (NasdaqGS:SPAR) useful as an attempt to give more color around how Spartan Motors is currently performing.
How SPAR fared against its long-term earnings performance and its industry
SPAR's trailing twelve-month earnings (from 30 September 2019) of US$17m has increased by 9.4% 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 52%, indicating the rate at which SPAR is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Spartan Motors has fallen short of achieving a 20% return on equity (ROE), recording 8.6% instead. Furthermore, its return on assets (ROA) of 3.1% is below the US Machinery industry of 7.4%, indicating Spartan Motors's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Spartan Motors’s debt level, has increased over the past 3 years from 0.7% to 6.2%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Spartan Motors 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 Spartan Motors to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SPAR’s future growth? Take a look at our free research report of analyst consensus for SPAR’s outlook.
- Financial Health: Are SPAR’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 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 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. Thank you for reading.