In this article, I will take a look at Culp, Inc.’s (NYSE:CULP) most recent earnings update (27 January 2019) and compare these latest figures against its performance over the past few years, along with how the rest of CULP’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
How Did CULP’s Recent Performance Stack Up Against Its Past?
CULP’s trailing twelve-month earnings (from 27 January 2019) of US$20m has jumped 36% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.9%, indicating the rate at which CULP is growing has accelerated. What’s enabled this growth? Let’s see whether it is merely because of industry tailwinds, or if Culp has seen some company-specific growth.
In terms of returns from investment, Culp has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 8.5% exceeds the US Luxury industry of 8.3%, indicating Culp has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Culp’s debt level, has declined over the past 3 years from 20% to 11%.
What does this mean?
Culp’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Culp gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Culp to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CULP’s future growth? Take a look at our free research report of analyst consensus for CULP’s outlook.
- Financial Health: Are CULP’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 27 January 2019. This may not be consistent with full year annual report figures.
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