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Examining Cavco Industries, Inc.’s (NASDAQ:CVCO) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess CVCO’s latest performance announced on 29 December 2018 and weigh these figures against its longer term trend and industry movements.
Could CVCO beat the long-term trend and outperform its industry?
CVCO’s trailing twelve-month earnings (from 29 December 2018) of US$71m has jumped 41% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 31%, indicating the rate at which CVCO is growing has accelerated. What’s enabled this growth? Let’s see whether it is solely attributable to an industry uplift, or if Cavco Industries has seen some company-specific growth.
In terms of returns from investment, Cavco Industries has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 9.6% exceeds the US Consumer Durables industry of 6.8%, indicating Cavco Industries has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cavco Industries’s debt level, has increased over the past 3 years from 9.6% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 25% to 11% over the past 5 years.
What does this mean?
Though Cavco Industries’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Cavco Industries gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Cavco Industries to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CVCO’s future growth? Take a look at our free research report of analyst consensus for CVCO’s outlook.
- Financial Health: Are CVCO’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 29 December 2018. 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.