How Does Bowl America Incorporated’s (NYSEMKT:BWL.A) Earnings Growth Stack Up Against Industry Performance?
Assessing Bowl America Incorporated’s (NYSEMKT:BWL.A) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess BWL.A’s latest performance announced on 01 April 2018 and evaluate these figures to its historical trend and industry movements. View out our latest analysis for Bowl America
Could BWL.A beat the long-term trend and outperform its industry?
BWL.A’s trailing twelve-month earnings (from 01 April 2018) of US$3.58m has jumped 36.82% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12.39%, indicating the rate at which BWL.A is growing has accelerated. What’s the driver of this growth? Let’s see whether it is merely owing to industry tailwinds, or if Bowl America has experienced some company-specific growth.
Over the last couple of years, Bowl America increased bottom-line, while its top-line fell, by successfully controlling its costs. This brought about to a margin expansion and profitability over time. Viewing growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 16.29% over the prior twelve months, and 11.97% over the past five years. This shows that whatever uplift the industry is gaining from, Bowl America is capable of amplifying this to its advantage.
In terms of returns from investment, Bowl America has not invested its equity funds well, leading to a 14.37% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 10.34% exceeds the US Hospitality industry of 6.96%, indicating Bowl America has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Bowl America’s debt level, has increased over the past 3 years from 6.78% to 16.16%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Bowl America gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Bowl America to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BWL.A’s future growth? Take a look at our free research report of analyst consensus for BWL.A’s outlook.
Financial Health: Is BWL.A’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 01 April 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.
